Zero Coupon And Original Issue Discount Bond Call Terms

From Open Risk Manual

Definition

Zero Coupon And Original Issue Discount Bond Call Terms. Call feature specific to a zero coupon or original issue discount (OID) bond

Fannie Mae also issues zero-coupon callable debt securities. Zero-coupon notes are debt securities on which no coupon interest is paid to the investor. Rather, the security is purchased at a discounted dollar price and matures at par. If the option on a callable zero-coupon security is exercised, it is redeemed at a higher dollar price than the original issue price.

The yield for a callable zero-coupon security is based on the difference between the original discounted price and the principal payment at the call date.

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.