What is the main difference in computing the selling price of a zero-coupon bond and the selling price of a traditional bond?
A) There is no difference.
B) Zero coupon bonds have zero interest paid during the term of the bond.
C) No present value calculations are necessary.
D) Zero-coupon bonds typically sell at a premium.

Question

Quizplus · Accepted Answer

Zero-coupon bonds do not pay periodic interest, so their selling price is calculated by discounting the face value back to the present value, unlike traditional bonds which pay periodic interest.

What Is the Main Difference in Computing the Selling Price