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Zero coupon loan notes

SSyed6y ago
Hi sir Can you emphasise on the difference between traditional loan notes and zero coupon
John MoffatJohn MoffatTutor6y ago#1
The only difference is that zero coupon bonds pay zero interest (the coupon rate is the interest rate). As I explain in my lectures, investors will accept a lower interest rate if instead they are paid a premium on redemption. The lower the interest rate the higher the premium on redemption. If the interest rate is zero then the premium will be a lot bigger.
SSyed6y ago#2
Thankyou sir
John MoffatJohn MoffatTutor6y ago#3
You are welcome :-)
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