Which ONE of the Following Statements Is True

question 71

Multiple Choice

Which ONE of the following statements is true?

• A) Zero coupon bonds have no coupon payments over its life and only offer a single payment at maturity.
• B) Zero coupon bonds sell well below their face value (at a deep discount) because they offer no coupons.
• C) Zero coupon bonds must sell for less than similar bonds that make coupon payments before maturity.
• D) All of the above are true.

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Definitions:

Efficient Price

A market price that reflects all available information and results in an allocation of resources that maximizes overall utility.

Marginal Cost

The incurred cost from generating one more unit of a product or service.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.