Investment VehiclesPregunta 29 de 110
Which of the following best describes a zero-coupon bond?
a.It is issued at a discount and pays no periodic interest, maturing at par
b.It pays a higher coupon than comparable bonds
c.It pays interest monthly rather than semiannually
d.It cannot be issued by the U.S. Treasury
Explicación
A zero-coupon bond is sold at a deep discount and makes no periodic interest payments, returning full par value at maturity. The investor's return is the difference between the purchase price and par. Treasury STRIPS are a common example of zero-coupon instruments.
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