If a Zero-Coupon Bond Sells for Par, the Nominal Interest

question 40

Multiple Choice

If a zero-coupon bond sells for par, the nominal interest rate on that bond is:

• A) 100 percent.
• B) negative.
• C) zero.
• D) infinity.

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Definitions:

Accounts Receivable

Amounts due to a company from its customers or clients for services rendered or goods delivered, but not yet paid for.

Finance Charge

A fee representing the cost of credit or the cost of borrowing, typically detailed in the terms of a loan or credit agreement.

Accounts Receivable

Money owed to a business by its customers for products or services delivered or used but not yet paid for.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that is expected to be uncollectible.