Discounted securities are debt instruments that pay periodic interest payments and sell at par value when issued.The interest payments generate a positive return for the purchaser of discounted securities.

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Discounted securities are debt instruments that are sold below par value, meaning that their initial purchase price is lower than the principal value they will eventually pay back at maturity. This lower purchase price means that the interest payments will not generate a positive return for the purchaser since they are already receiving a discount on the security. However, discounted securities can still be attractive to investors who are looking for a steady stream of income and are willing to accept a lower yield in exchange for a lower initial investment.

Discounted Securities Are Debt Instruments That Pay Periodic Interest Payments