Floating Cubes Inc., a large furniture corporation, decided to raise funds through a bond offering. It sold each bond at $1,000 per bond and each bond had value of $1,000 at the end of its maturity period. Which of the following is being used by Floating Cubes Inc. to raise funds?

Question

Quizplus · Accepted Answer

Floating Cubes Inc. is using a zero coupon bond to raise funds. A zero coupon bond is sold at a discount to its face value and does not pay interest. Instead, the bondholder receives the face value of the bond at maturity. In this case, each bond was sold for $1,000 and has a value of $1,000 at the end of its maturity period, indicating it is a zero coupon bond.