Simple English definitions for legal terms
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A bond discount is the amount by which a bond's market value is lower than its face value. In other words, it is the difference between what you pay for a bond and the amount you will receive when the bond matures.
For example, if you buy a bond with a face value of $1,000 for $900, the bond is said to be sold at a discount. When the bond matures, you will receive the full face value of $1,000, but you only paid $900 for it.
Bond discounts can occur for various reasons, such as changes in interest rates or credit ratings. Investors may buy bonds at a discount to earn a higher yield, but they also face the risk of losing money if the bond issuer defaults.