Assume the required return on a zero-coupon bond will remain constant over the remainder of its life. The market value of the bond will:

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Zero-coupon bonds do not pay periodic interest. Instead, they are issued at a discount to their face value and mature at face value. The difference between the purchase price and the face value represents the interest income to the investor. As the bond approaches its maturity date, its market value converges towards its face value, effectively increasing each year by an amount that reflects the imputed interest for the period, assuming a constant required return. This process is known as accretion of discount.

Assume the Required Return on a Zero-Coupon Bond Will Remain