A zero-coupon bond is different from a typical bond issue because
A) The investor can clip the coupons and get paid for the periodic interest on the bond while a typical bond does not have coupons.
B) It is reported in the balance sheet net of the discount on the bond.
C) The zero-coupon bond's deep discount is reported as an asset and a typical bond that is issued at a discount is reported net of the discount.
D) It does not pay any periodic interest while the typical bond does.

Question

Quizplus · Accepted Answer

A zero-coupon bond does not pay any periodic interest, while a typical bond issue does. The other options describe accounting treatments of zero-coupon bonds, but do not differentiate them from typical bonds on a fundamental level.

A Zero-Coupon Bond Is Different from a Typical Bond Issue