A Zero-Coupon Bond Is One That

question 70

Multiple Choice

A zero-coupon bond is one that

• A) effectively has a zero-percent coupon rate.
• B) pays interest to the investor based on the general level of interest rates rather than at a specified coupon rate.
• C) pays interest to the investor without requiring the actual coupon to be mailed to the corporation.
• D) is issued by state governments because they don't have to pay interest.
• E) is analyzed primarily by focusing ("zeroing in") on the coupon rate.

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