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.

Understand the cash payback period and its usage in assessing investment recovery times.

Recognize the impact of the time value of money on capital budgeting techniques.

Identify and apply different approaches to capital budgeting including payback, net present value, and internal rate of return methods.

Analyze investment proposals using appropriate financial metrics and tables.

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