FIxed Income Elements

Q. Which type of bond most likely earns interest on an implied basis?

  1. Floater
  2. Conventional bond
  3. 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?

It’s from CFA Book Reading 42 {Fixed Income}