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Q1: Which one of the following statements about zero coupon bonds is true?

Q1:Which one of the following statements about zero coupon bonds is true?A. Zero coupon bonds have no coupon payments but promise a single payment at maturity.B. Zero coupon bonds must sell for less than similar bonds that make periodic coupon payments.C. Zero coupon bonds make coupon payments but no principal payment at maturity.D. An investor expects a positive capital gain if they hold a zero coupon bond to expiry

Q2:Which ONE of the following statements is true?

A. A zero coupon bond has no coupon payments over its life and only offers a single payment at maturity.

B. A zero coupon bonds sell well below its face value (at a deep discount) because it offer no coupons.

C. Zero coupon bonds must sell, before maturity, for less than similar bonds that make coupon payments.

D. All of the above are true.

Top Answer

Answer 1)A. Zero coupon bonds have no coupon... View the full answer

7 comments
  • so you mean, for question 1, b,c &d is wrong??
    • yijun98927
    • May 02, 2018 at 9:06pm
  • Yes
    • rocky4ever
    • May 02, 2018 at 9:09pm
  • but actually this question only has one for wrong ...
    • yijun98927
    • May 02, 2018 at 9:11pm
  • B) It has written Zero coupon bonds must sell for less than similar bonds that make periodic coupon payments , But at maturity it will equal , If we consider that it is before maturity than Option B is also true
    • rocky4ever
    • May 02, 2018 at 9:14pm
  • Option C ) It is Totally Wrong as it makes coupon payment where Zero coupon bond has no coupon at all , it only pays face value at maturity
    • rocky4ever
    • May 02, 2018 at 9:16pm
  • So if it is to mark one False , Please select Option C as it is make coupon payments but no principal payment at maturity which is prima facie incorrect statement
    • rocky4ever
    • May 02, 2018 at 9:21pm
  • Please feel free to mark as unhelpful, if you does not find my answer helpful.
    • rocky4ever
    • May 02, 2018 at 9:22pm

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