We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.
© 2016 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Original Issue Discount

Definition:

Original Issue Discount (OID) is the difference between the face, or par, value of a bond and the amount actually paid for the bond.

Example

Let's say you buy a $1,000 bond but you pay $800 for it because it's a zero coupon bond, which doesn't pay interest. You get a nice discount when you buy the bond, and you get the full face value when it matures. The difference between the discount rate and the money you get at maturity is the original issue discount. (In this case, $200.)