Senior Discount Notes

Business, Legal & Accounting Glossary

Definition: Senior Discount Notes

Senior Discount Notes

Full Definition of Senior Discount Notes

Senior discount notes are debt securities for which the debt holder possesses a claim senior to those of other of the company’s debt holders should the company be liquidated or cease to function as a going concern.

Discounted means they’re like zero-coupon bonds. The interest expense associated with the debt isn’t paid out in cash every year, it accrues and is paid out at maturity (the end of the bond’s life). If it’s a 10% discounted bond, principal of $100 million, due in ten years, that means you, the lender, give me $38.554 million today, and I promise to pay you $100 million ten years from now. The yield to maturity on a 10% bond bought at par, with interest payments reinvested, can be found by taking the principal amount and compounding it by the rate of interest over the given time period. The difference between the principal amount (the face value of the note) and the cash received by the borrower today is the discount.

The term “senior discount notes” can also refer to notes that seniors write to remind themselves to ask for a senior discount.

Related Phrases

Senior debt
Discounted bond

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Modern Language Association (MLA):
Senior Discount Notes. Payroll & Accounting Heaven Ltd.
January 19, 2022
Chicago Manual of Style (CMS):
Senior Discount Notes. Payroll & Accounting Heaven Ltd. (accessed: January 19, 2022).
American Psychological Association (APA):
Senior Discount Notes. Retrieved January 19, 2022
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Definition Sources

Definitions for Senior Discount Notes are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 28th November, 2021 | 0 Views.