Business and Personal Finance Dictionary

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• ORIGINAL ISSUE DISCOUNT
  
  A bond or other debt security that is issued at less than par value but redeemed for full par value at maturity is an original issue discount. The appeal, from an investor's perspective, is being able to invest less up front while anticipating full repayment later on. Issuers like these securities as well because they don't have to pay periodic interest. Instead, the interest accrues during the term of the bond so that the total interest when combined with the principal equals the full par value at maturity. Zero-coupon bonds are a popular type of original issue discount security.
  
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