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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Zero coupon bonds
Hi
Are zero coupon bonds issued at a discount on their redemption value or on their nominal value? In your notes, it’s issued at a discount on their nominal value but in the examiner’s answer, I found that he wrote redemption value. This is a confusion if you can help me with.
Thank you.
Shamaun
Zero coupon bonds are either issued at a discount, or are repaid at a premium.
(The end result is effectively the same – you get no interest each year, but there is a big gain made on redemption)