What is a 'Discount Note'
A shortterm debt obligation issued at a discount to par. Discount notes are similar to zerocoupon bonds and Treasury bills and are typically issued by governmentsponsored agencies or highly rated corporate borrowers. Discount notes do not make interest payments; instead the bond is matured at a par value above the purchase price, and the price appreciation is used to calculate the investment's yield.
Discount notes will have maturity dates of up to one year in length.
BREAKING DOWN 'Discount Note'
The biggest issuers of discount notes are Freddie Mac and the Federal Home Loan Banks. Most institutional fixedincome buyers will compare the yieldtomaturity (YTM) of various zerocoupon debt offerings with standard coupon bonds, looking for yield pickup in discount bonds.

Discount
The condition of the price of a bond that is lower than par, ... 
Discount Bond
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Discount Yield
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Market Discount
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Bond Discount
The amount by which the market price of a bond is lower than ... 
Accrued Market Discount
The gain in the value of a discount bond expected from holding ...

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All About Zero Coupon Bonds
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Investing
How Are ZeroCoupon Municipal Bonds Taxed?
What every investor needs to know about taxes and zerocoupon muni bonds. 
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Calculating Bond Equivalent Yield
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How To Evaluate Bond Performance
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ZeroCoupon Bond
A zerocoupon bond or ‘no coupon’ bond is one that does not disburse regular interest payments. Instead, the investor buys the bond at a steep discount price; that is, at a price ... 
Investing
Finding A Discount On Your Next Bond Investment
Discount rates have nothing to do with buying things on sale. Rather, it helps you figure out how much to pay today for a bond or cash flow in the future. 
Investing
How Do I Calculate Yield To Maturity Of A Zero Coupon Bond?
Yield to maturity is a basic investing concept used by investors to compare bonds of different coupons and times until maturity.

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