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Discount
Discount is a price that is less than the regular sale price. In bond investing, a discount is a bond price that is less than the par value of the bond. Such a bond is said to be trading at a discount to par value. For example, a bond with a par value of $1,000 that sells at $985 is selling at a discount of $15 to its par value. A bond with a coupon rate that is below the market interest rate for similar bonds trades at a discount.
Discount points
Discount points are also called points, mortgage points, and loan discount points. A point is equal to 1% of the loan amount. For example, 1 point on a loan of $150,000 is $1,500. Lenders consider mortgage points as interest that you pay in advance. As a result, the more points you pay when you close the loan, the lower your interest rate. If you qualify, you may be able to deduct mortgage points in the year you close the loan for tax purposes. Otherwise, you will have to amortize the points paid over the term of the loan.
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