Which of the Following Is Not True Regarding Zero-Coupon Bonds

question 12

Multiple Choice

Which of the following is not true regarding zero-coupon bonds?

• A)They are issued at a deep discount from par value.
• B)Investors are taxed annually on the amount of interest earned, even though the interest will not be received until maturity.
• C)The issuing firm is permitted to deduct the amortized discount as interest expense for federal income tax purposes, even though it does not pay interest.
• D)Zero-coupon bonds are purchased mainly for tax-exempt investment account, such as pension funds and individual retirement accounts.
• E)all of the above are true

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Definitions:

Orbital

An equation that represents the wave-like actions of one or two electrons in an atomic structure.

Electrons

Subatomic particles with a negative electric charge, found orbiting the nucleus of an atom, fundamentally involved in chemical bonds and reactions.

Electronic Configuration

The distribution of electrons of an atom or molecule in atomic or molecular orbitals.

Boron

A lightweight, semimetallic element, used in compounds to enhance strength, hardness, and resistance to chemical change.