I'm reading The Intelligent Investor by Benjamin Graham, and I came across the text below.

What I don't understand is: if the issues sold at 60 through 1970 but closed at 77 that year, wouldn't that mean they are selling at a premium? Why does the author say the issues are sold at a discount?

In 1970 it was possible to buy a number of old issues at large discounts. Some of these are accepted at par in settlement of estate taxes. Example: The U.S. Treasury 3(1/2)s due 1990 are in this category; they sold at 60 in 1970, but closed 1970 above 77.

Thank you for reading!

  • $\begingroup$ @noob2 Hmm I'm confused about the part where they sell at 60 (issued at 60, I assume) and closed at 77 (traded at 77?)... I mean, 77 is higher than 60, so how can it be considered discount? Maybe the thing is, like you said, they are issued at 100, not at 60? But how would we know that from the text? $\endgroup$ Commented Dec 22, 2021 at 9:34
  • $\begingroup$ These bonds, so called Flower Bonds or estate tax anticipation bonds, were sold by the govt at a price less than 100 (i.e. at a discount). They don't exist any more. You can look up how they worked if you are interested. $\endgroup$
    – nbbo2
    Commented Dec 22, 2021 at 9:35


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