What does it mean when an investor says she has invested in a twenty-year zero-coupon bond?
A) The investor is not receiving any return but the principal is safe for the period.
B) The investor does not have to be concerned about investing the interest payments.
C) The yield to maturity floats up and down with prevailing rates over the life of the bond.
D) The investor receives direct deposits of annual interest payments without clipping coupons.
E) The investment is locked in for the twenty year period because the investor cannot sell the bond.
Correct Answer:
Verified
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