How Are Investors in Zero-Coupon Bonds Compensated for Making Such

question 77

Multiple Choice

How are investors in zero-coupon bonds compensated for making such an investment?

• A)Such bonds are purchased at their face value and sold at a premium at a later date.
• B)The bond makes regular interest payments.
• C)Such bonds are purchased at a discount to their face value.
• D)The face value of these bonds is less than the value of the bond when the bond matures.
• E)Bond prices always increase over time.

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Definitions:

Pure Play Approach

A business strategy focusing solely on a single product or service to gain competitive advantage.

WACC

The Weighted Average Cost of Capital is a method used to compute a company's cost of capital, where each type of capital is assigned a weight proportional to its importance.

Performance Measure

Metrics or standards used to evaluate the effectiveness, efficiency, and productivity of an individual, organization, or process.

Corporate Tax Rate

The tax imposed on the net income of a corporation.