Given the face value and maturity of a zero- coupon bond, a rise in the yield implies that the purchase price will:
A) remain unchanged, because there are no coupons.
B) fall.
C) remain unchanged, up until the day it matures.
D) rise.

Question

Quizplus · Accepted Answer

A rise in the yield of a zero-coupon bond means that the discount rate has increased, which results in a lower present value or purchase price of the bond.

Given the Face Value and Maturity of a Zero- Coupon