Discount and Accrual Instruments
There are two types of instruments in the fixed income market that pay the interest at maturity, instead of paying it as coupons. Discount instruments, like repurchase agreements, are issued at a discount of the face value, and their maturity value is the face value. Accrual instruments are issued at the face value and mature at the face value plus interest.
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Famous quotes containing the words discount and/or instruments:
“Don’t discount our powers;
We have made a pass
At the infinite,”
—Robert Frost (1874–1963)
“The form of act or thought mattered nothing. The hymns of David, the plays of Shakespeare, the metaphysics of Descartes, the crimes of Borgia, the virtues of Antonine, the atheism of yesterday and the materialism of to-day, were all emanation of divine thought, doing their appointed work. It was the duty of the church to deal with them all, not as though they existed through a power hostile to the deity, but as instruments of the deity to work out his unrevealed ends.”
—Henry Brooks Adams (1838–1918)