Imputed interest

Imputed interest in bonds refers to an interest payment that is not really received by the investor but can be assumed as an interest payment. In zero-coupon bonds, the face value of the bond is paid at maturity but the price that the investor paid for it is significantly lower than the face value. The absence of coupon payments or interest payments on zero-coupon bonds are covered by the additional money that the investor would receive when he gets the full face value amount of the bond. Since the price paid by the investor is lower than the face value, the difference between the lower price paid and the higher face value can be considered an interest payment even if its not really interest payments.

Stocks | Forex | Options | Economics | Bonds | History | Language learning | Technology | Technical Analysis | Fundamental Analysis
Copyright © 2014 econtrader | Risk disclosure | Terms of Use