The Advantage to Owning Zero-Coupon Bonds Is That

question 62

Multiple Choice

The advantage to owning zero-coupon bonds is that

• A)there is no risk that the interest over the life of the bond will have to be reinvested at a lower rate.
• B)they are insured by the federal government and hence default risk is zero.
• C)their coupon payments are made annually instead of semi-annually.
• D)interest payments are not taxed on the amount of the interest earned each year.

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Definitions:

Intermediate Product

A product that undergoes further processing before it becomes a final good ready for sale to the consumer.

Processed Further

A strategic decision in manufacturing pertaining to the continuation of additional operations or processing on a product to enhance its value.

Financial Advantage

The benefit of having a stronger financial position or undertaking actions that result in financial gain, such as cost savings or increased revenue.

Cane Juice

A liquid extracted from sugarcane, often used as a sweetener or drink.