DEFINITION of 'Accrued Market Discount'
The gain in the value of a discount bond expected from holding it for any duration until its maturity. Because discount bonds are sold below face value, it is expected that they will gradually rise in market price until reaching maturity. The difference between the discounted price for which the bond is sold and its face value at maturity represents the return on investment to the bondholder and may be taxable at the federal, state and/or local level.
BREAKING DOWN 'Accrued Market Discount'
Suppose an investor purchases a discount bond with a par value of $1,000 for $700. By holding the bond, the investor can expect a maximum gain of $300. Any appreciation above the $700 paid is called the accrued market discount. This rise in price is different than that which occurs in regular coupon bonds as a result of lowering interest rates.

Discount Bond
A bond that is issued for less than its par (or face) value, ... 
Bond Discount
The amount by which the market price of a bond is lower than ... 
Discount
The condition of the price of a bond that is lower than par, ... 
Market Discount
The difference between a bond's stated redemption price and its ... 
Pull To Par
The movement of a bond's price toward its face value as it approaches ... 
Bond
A debt investment in which an investor loans money to an entity ...

Bonds & Fixed Income
How To Evaluate Bond Performance
Learn about how investors should evaluate bond performance. See how the maturity of a bond can impact its exposure to interest rate risk. 
Professionals
Yield To Maturity
A bond’s yield to maturity is the investor’s total annualized return for investing in the bond. A bond’s yield to maturity takes into consideration the annual income received ... 
Professionals
Calculating Yields
When an investor purchases a bond in the secondary market at a discount, the discount must be accreted over the remaining life of the bond. The accretion of the discount will result in a higher ... 
Bonds & Fixed Income
Understanding Face Value
Face value is the dollar value stated on a security. 
Bonds & Fixed Income
Comparing Yield To Maturity And The Coupon Rate
Investors base investing decisions and strategies on yield to maturity more so than coupon rates. 
Professionals
Bond Value and Price
CFA Level 1  Bond Value and Price. Explains why a bond's value can change in relation to interest rates and time to maturity. Shows calculations for valuing a zerocoupon bond. 
Professionals
Bond Valuation
We look at how to determine a bond's value based on its price and prevailing interest rates. 
Bonds & Fixed Income
Using Excel PV Function to compute Bonds PV
To determine the value of a bond today  for a fixed principal (par value) to be repaid in the future at any predetermined time  we can use an Excel spreadsheet. 
Professionals
Bond Yields
FINRA/NASAA Series 65: Section 8 Bond Yields. In this section yield to maturity, current yield, yield to call and real interest rate. 
Professionals
Forward Contracts on Bonds
CFA Level 1  Forward Contracts on Bonds. Learn the features of forward contracts on bonds. See how a bonds maturity, embedded options and default risk affect the forwards contract.

Why is my bond worth less than face value?
Find out how bonds can be issued or traded for less than their listed face values, and learn what causes bond prices to fluctuate ... Read Answer >> 
What happens to the price of a premium bond as it approaches maturity?
Learn how bonds trade in regard to premiums and discounts, and how bond prices shift closer to par value as bonds approach ... Read Answer >> 
What determines the price of a bond in the open market?
Learn more about some of the factors that influence the valuation of bonds on the open market, and why bond prices and yields ... Read Answer >> 
Can the marginal propensity to consume ever be negative?
Find out when a bond's yield to maturity is equal to its coupon rate, and learn about the basic components of bonds and how ... Read Answer >> 
How can I calculate the carrying value of a bond?
Learn what the carrying value of a bond means, how it can change and the easiest way to calculate a bond's carrying value ... Read Answer >> 
What types of fees apply to checking accounts?
Learn about the difference between a bond's coupon rate and its yield to maturity, and how the par value, coupon rate and ... Read Answer >>