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asked 9 months ago
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There is no difference between a zero coupon bond and a deep discount bond. They are both the same. Zero coupon bonds are often called discount bounds or deep discount bonds. These bonds are called so because they do not carry a coupon payment and no interest is given to the bond holder during the term of the bond. In order to make up for this lack of interest, the bonds are sold at a price below par value. They are sold at a discount so that their value becomes comparable to the market interest rate.
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