A Zero-Coupon Bond Is Different from a Typical Bond Issue

question 17

Multiple Choice

A zero-coupon bond is different from a typical bond issue because

• A) The investor can clip the coupons and get paid for the periodic interest on the bond while a typical bond does not have coupons.
• B) It is reported in the balance sheet net of the discount on the bond.
• C) The zero-coupon bond's deep discount is reported as an asset and a typical bond that is issued at a discount is reported net of the discount.
• D) It does not pay any periodic interest while the typical bond does.

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Definitions:

Inductor

A passive electrical component used in circuits to store energy in a magnetic field when electric current flows through it.

Load Resistor

A resistor used within an electrical or electronic circuit to impose a specific load, often for testing, stabilizing, or controlling current flow.

Reject Low Frequencies

Describes a filter's ability to attenuate or eliminate signals below a certain frequency threshold, allowing higher frequencies to pass.

High-pass

A filter that allows frequencies higher than its cutoff frequency to pass through while attenuating frequencies below the cutoff.