A bond whose coupon is lower than the market rate of interest (prevailing yield) at the time of issue. This results in selling the bond at a discount from par value at issuance. A zero-coupon bond is a special form of minicoupon bond (both are issued at a discount, though it is higher in a zero-coupon bond). Accordingly, a minicoupon bond will have a longer duration than an otherwise identical coupon bond because of the smaller coupon.
October 11, 2024
