An Investor in a Country with an Original Issue Discount

question 7

Multiple Choice

an investor in a country with an original issue discount tax provision purchases a 20-year zero-coupon bond at a deep discount to par value. The investor plans to hold the bond Until the maturity date. The investor will most likely report:

• A) a capital gain at maturity.
• B) a tax deduction in the year the bond is purchased.
• C) taxable income from the bond every year until maturity.

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Definitions:

Financial Know-How

The knowledge and skills related to managing finances, including budgeting, investing, and understanding financial markets and instruments.

Unanticipated Issues

Problems or challenges that arise unexpectedly and were not previously considered or planned for.

Financial Theories

Concepts and models that explain how financial markets operate, including how securities are priced and how financial decisions impact markets.

IPO

stands for Initial Public Offering, the process by which a private company goes public by offering its shares to the general public for the first time.