Accretion of Discount

Filed Under » ,
Dictionary Says

Definition of 'Accretion of Discount'

The increase in the value of a discounted instrument as time passes and it approaches maturity. The value of the instrument will accrete (grow) at the interest rate implied by the discounted issuance price, the value at maturity and the term to maturity.
Investopedia Says

Investopedia explains 'Accretion of Discount'

For example, a three-month note maturing at $100 is issued at $98. Between issuance and maturity, the value of the bond will increase until it reaches its full value of $100, which is the amount that will be paid at maturity.

Accretion can be accounted for in a straight-line method, whereby the increase is evenly spread throughout the term, or by constant interest, whereby the increase is heaviest closest to maturity.

Related Definitions

Search results for

'Accretion of Discount'

  • Accretion / Dilution Analysis: A Merger Mystery

    http://www.investopedia.com/articles/fundamental-analysis/09/accretion-dilution-analysis-mergers.asp
    Accretion / Dilution Analysis: A Merger Mystery. ... Thus, we have accretion /
    dilution analysis. Advertisement - Article continues below. ...

  • Series 7 Study Guide - Municipal Securities - Muni Pricing ...

    http://www.investopedia.com/exam-guide/series-7/municipal-securities/muni-premium-discount-pricing.asp
    ... Consequently, institutions must treat gains from accretion of discounts as ordinary
    income. Whether your client holds a premium or discount muni, the coupon ...

  • Series 7 Study Guide - Risk and Tax Considerations - Tax ...

    http://www.investopedia.com/exam-guide/series-7/investment-risk-tax-considerations/tax-considerations.asp
    ... 6. Discount Bonds: bonds issued and sold at a discount pay not semi-annual interest.
    The accretion or increase in value, however, is subject to ordinary income ...

  • What Investors Can Learn From M&A Payment Methods

    http://www.investopedia.com/articles/financial-theory/11/MA-payment-reveals-alot.asp
    ... to currency, it would take more stock trading at a discount to intrinsic ... (For another
    look at analyzing an M&A deal, check out Accretion / Dilution Analysis: A ...

  • 5 Common Trading Multiples Used In Oil And Gas Valuation

    http://www.investopedia.com/articles/basics/11/common-multiples-used-in-oil-and-gas-valuation.asp
    ... Other noncash expenses that should be added back in are impairments, accretion of
    asset ... if the multiple is low amongst its peers it is trading at a discount. ...

  • Natural Gas Industry: An Investment Guide

    http://www.investopedia.com/articles/stocks/10/investing-in-natural-gas-guide.asp
    ... Depreciation, depletion, amortization and accretion, $52,587. ... from the total, and
    then the remaining cash flows are typically discounted using a 10% discount rate ...

  • Retail Acquisitions Make The World Go Round

    http://stocks.investopedia.com/stock-analysis/2010/Retail-Acquisitions-Make-The-World-Go-Round-M-TSCO-GPS-BBY-AEO0805.aspx
    ... my opinion, enabled it to open Old Navy at the discount level several ... mergers and
    acquisitions can impact a company's earnings in Accretion / Dilution Analysis ...

  • 4 Leverage Ratios Used In Evaluating Energy Firms

    http://www.investopedia.com/articles/fundamental-analysis/12/4-Leverage-Ratios-Used-In-Evaluating_Energy_Firms.asp
    ... Other noncash expenses that should be added back in are impairments, accretion
    of asset retirement obligations and deferred taxes. ...

  • CFP Study Guide - Financial Planning: Process and Rules ...

    http://www.investopedia.com/exam-guide/cfp/financial-planning-process-rules/default.asp
    ... 36. Basis: 36.1 Introduction; 36.2 Amortization and Accretion; 36.3 Basis
    of Property Received by Gift and in Nontaxable Transactions; ...

  • CFP Study Guide - Principles of Risk and Insurance - The Risk ...

    http://www.investopedia.com/exam-guide/cfp/principles-of-risk-and-insurance/cfp2.asp
    ... 36. Basis: 36.1 Introduction; 36.2 Amortization and Accretion; 36.3 Basis
    of Property Received by Gift and in Nontaxable Transactions; ...

Related Articles

Partner Links