A Zero Coupon Bond's Value Increases Over Time at a Compounded

question 104

True/False

A zero coupon bond's value increases over time at a compounded (or exponential)rate,not at a constant (or linear)rate.The corporate issuer reports the annual increase as interest expense,and the owner of the bond reports the increase as interest income and pays taxes on it each year.

---

Definitions:

Exocrine Gland

A gland that excretes its products through a duct that opens onto a free surface, such as the skin (e.g., sweat glands). Compare with endocrine gland.

Pancreas

A gland in the digestive and endocrine systems of vertebrates that produces digestive enzymes and hormones, including insulin.

Intracellular Receptors

Proteins located within the cell cytoplasm or nucleus that bind to specific molecules and trigger cellular responses.

Steroid Hormones

Hormones, such as insect molting hormone, cortisol, and male/female sex hormones, that are derived from cholesterol.