Hi sir
Can you emphasise on the difference between traditional loan notes and zero coupon
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Zero coupon loan notes
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.
Thankyou sir
You are welcome :-)
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