Definition of Pure Discount Instrument
Pure Discount Instrument is a type of protection that will pay no earnings until maturity; upon expiry, the owner gets the head value of the instrument.
Brief Explanation of Pure Discount Instrument
The instrument is initially marketed for less than its experience value (at a discount).
It is a debt instrument that guarantees traders (holders/ buyers) a single set transaction on a predetermined upcoming time frame. In simple terms, this instrument will pay no interest until adulthood. At the adulthood time frame, the owner is eligible to obtain its experience value. It is a protection that is marketed at a lower price and used for the full experience value at adulthood, offering a good generate value, but that makes no earnings expenses prior to adulthood.