DISCOUNT Bond:A zero-coupon/deep discount bond is a debt SECURITY with no coupon (zero-coupon) or substantially LOWER coupon than current interest rates. The bonds are issued at a discount to their nominal value, with the discount reflecting the prevailing market interest RATE. In the case of a zero-coupon bond, investors receive at maturity the difference between the purchase price and the nominal value of the bond (so-called "uplift") i.e. difference between the sales price and the original cost is investors profit.The longer the maturity of the bond, the greater the discount against par value.Secondly, there is no or significantly reduced reinvestment risk for the investor i.e. the possibility that market interest rates may fall in the future; the bond has a longer "duration" than a bond of comparable maturity which PAYS fixed or floating interest.A deep discount bond will typically have a market price of 20% or more below its face value. Therefore, DDBs are not issued to face value of the bond.