Zero-Coupon Bonds

question 122

Multiple Choice

Zero-coupon bonds:

• A) Offer a return in the form of a deep discount off the face value.
• B) Result in zero interest expense for the issuer.
• C) Result in zero interest revenue for the investor.
• D) Are reported as shareholders' equity by the issuer.

---

Definitions:

Availability Delay

A period where funds or resources are not immediately accessible or ready for use, often due to processing or logistical reasons.

Total Float

The maximum duration a project task can be postponed without impacting the overall project finish date.

Precautionary Motive

The desire to hold cash or liquid assets to safeguard against future uncertainties and unplanned expenses.

Speculative Motive

The intention to hold cash for the purpose of taking advantage of future opportunities that may arise, such as bargain purchases or earning profits from price changes.