Doubts

what is the difference between deep discount bonds and zero coupon bonds..?
Replies (3)

both are same but the names are different. both are issued at discount & matured at FV. & the difference is interest earned by you

Deep Discount Bond is technically called a Zero Coupon Bond.

 A zero-coupon/deep discount bond is a debt security with no coupon (zero-coupon) or substantially lower coupon than current interest rates
with cumulative option

The difference between a zero-coupon bond and a regular bond is that a zero-coupon bond does not pay coupons, or interest payments, to the bondholder while a typical bond does make these interest payments. The holder of a zero-coupon bond only receives the face value of the bond at maturity.

Zero-coupon bonds are purchased at a large discount, known as deep discount, to the face value of the bond. A coupon-paying bond will initially trade near the price of its face value. Zero-coupon bondholders gain on the difference between what they pay for the bond and the amount they will receive at maturity.                           

                                                                 enlightened

 

                                                                              

Then both are one and the same???

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