____ bonds are particularly advantageous to investors when utilized in an IRA or a (k) tax-deferred investment.

Question

____ bonds are particularly advantageous to investors when utilized in an IRA or a (k) tax-deferred investment.

Quizplus · Accepted Answer

Zero-coupon bonds do not pay interest periodically, but are sold at a discount to their face value and mature at face value. Since investors do not receive interest payments, they do not have to pay taxes on that income annually. This makes zero-coupon bonds particularly advantageous to hold in a tax-deferred account, such as an IRA or 401(k), where taxes on the gain are deferred until withdrawal.

____ Bonds Are Particularly Advantageous to Investors When Utilized in an IRA