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

question 15

Multiple Choice

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

• A)They are issued at a deep discount from par value.
• B)Investors are taxed on the total amount of interest earned at 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 until maturity.
• D)Zero-coupon bonds are purchased mainly for tax-exempt investment accounts, such as pension funds and individual retirement accounts.
• E)All of the above are true.

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Definitions:

Foreign Corrupt Practices Act (FCPA)

A U.S. law that prohibits companies and their individuals from bribing foreign officials for business advantages.

Bribery Provisions

Legal rules or clauses that deal with the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty.

Grease Payments

Small sums of money given to minor officials to expedite or ensure the performance of routine or necessary actions.

Cease and Desist Orders

Legal orders issued by a government agency or court directing a person or entity to stop engaging in a certain activity or behavior.