a.They are redeemed at a deep discount from par value.
b.Investors are taxed annually on the amount of interest earned, even though the interest is not actually paid
c.The issuing firm is permitted to deduct the amortized discount as interest expense for tax purposes
d. Zero-coupon bonds are purchased mainly for tax-exempt investment accounts, such as pension funds and individual retirement accounts
As interest rates consistently rise over a specific period, the market price of a bond you own would likely ______ over this period. (Assume no major change in the bond's default risk.)
a consistently increase
b consistently decrease
c remain unchanged
d change in a direction that cannot be determined with the above information
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