Zero coupon bonds are bonds that are issued:
A)With a zero effective interest rate.
B)At a rate that provides a large discount at issuance.
C)At a rate that has zero difference between the coupon rate and the market rate of interest.
D)As bonds that will have zero amortization recorded over the life of the bond.

Question

Quizplus · Accepted Answer

Zero coupon bonds are issued at a rate that provides a large discount at issuance, meaning they are sold for less than their face value and do not pay regular interest. The difference between the discounted price and the face value is the return to the investor.

Zero Coupon Bonds Are Bonds That Are Issued