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:

Perpetual Inventory System

A method of accounting for inventory that updates the inventory levels continuously after each purchase, sale, or return.

Income Statement

An income statement is a financial statement that shows a company's revenues and expenses over a specific period, culminating in net income or loss.

Perpetual Inventory System

An inventory transaction recording method that utilizes computerized point-of-sale systems and enterprise asset management software to instantly register the sale or acquisition of goods.

Journal Entries

Written records of the financial transactions and events of a business, used to document and track the financial impact on its accounts.