Q. Which type of bond most likely earns interest on an implied basis?
- Floater
- Conventional bond
- Pure discount bond
what is the meaning of implied basis?
The answer is Pure Discount Bond
It’s a horrible phrase.
If they mean it earns implied interest, they should say that it earns implied interest.
And what they mean by that is that the interest isn’t explicit; i.e., the bond doesn’t make interest (coupon) payments.
Where did you get this question?