Which of the Following Is Not a Characteristic of a Zero-Coupon

question 21

Multiple Choice

Which of the following is not a characteristic of a zero-coupon bond?

• A)It doesn't pay interest.
• B)It is sold at a deep discount from face value.
• C)The annual increase in the bond's price is not taxable as ordinary income.
• D)It provides a means for corporations to take annual deductions without current cash outflow.

---

Definitions:

Inflows

Funds coming into a business from operations, investments, or financing activities.

Borrower in Default

A situation where a borrower fails to meet the legal obligations of a loan, such as not making scheduled payments.

Courses of Action

Different strategies or plans that an entity can choose to undertake in response to various scenarios or problems.

Quick Ratio

The quick ratio, or acid-test ratio, measures a company's ability to pay its short-term liabilities with its most liquid assets.