Hot to get accrued market discount?
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tiphanie
Apprentice
Joined: 07 Dec 2006
Posts: 6
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 Posted: 09/10/08 - 04:11 Post subject: |
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| Hi there people. My name is Joanne and I would appreciate if you could explain to me something about zero coupon bonds. I bought some of those couple of months ago. A friend of mine asked me something about accrued market discount. Can you tell me what it is? How to get accrued market discount? Thank you. |
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jard
Apprentice
Joined: 19 Oct 2004
Posts: 2
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| Posted: 10/09/08 - 21:07 Post subject: |
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| Hello Joanne. Well, here is the thing. As you probably know, zero coupon bonds are usually bought at a price which is below their initial, or face, value. As time goes by, their value is expected to rise gradually. Every rise of value above the price that you’ve paid is called accrued market discount. So, if you paid 600 dollars for the bonds with a face value of 1000, it is expected that their value rise within that range. Everything above 600 would be accrued market discount. What you have to do is closely follow the price of your bonds and catch the right moment to sell them. That is all I can tell you about this. Take care! |
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