What is a Bond Discount?
One of the realities of buying and selling bonds is the bond discount. Essentially, the bond discount is a fixed or percentage amount that is deducted from the actual purchase price of the bond, based on the current market value. Bond discounts represent a significant opportunity to build up a personal portfolio, depending on the projected performance of the bond. There can be several reasons why the approach of a bond discount may be a wise move for the current bondholder. One scenario has to do with concerns about changes in the bond’s par. If there is a strong sense that the bond is going to depreciate in value for some reason, the bond holder may choose to sell the bond at a discounted rate that will recoup the original investment in the bond, and perhaps provide a small profit. The discount bond price thus ensures that the investor does not lose money on the investment, even though the original anticipated gain from the transaction does not come to pass. A bond discount may also b
