Series 7 - General Securities Representative Exam

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Which of the following describes OID - Original Issue Discount?

A form of interest on a DPP issued at less than its face amount
A
A form of interest on an derivative instrument such as an option issued at less than its face amount
B
A form of interest on an equity instrument such as a stock issued at less than its face amount
C
A form of interest on a debt instrument such as a bond or note issued at less than its face amount
D

Explanations

OID applies to debt instruments and applies when the instrument is issued for a price less than its stated maturity redemption price

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