A pure discount security is an interest-bearing asset that pays:
A)interest on a semi-annual basis.
B)interest on an annual basis.
C)a single payment at maturity.
D)no interest.
E)a variable-rate interest.

Question

Quizplus · Accepted Answer

A pure discount security is issued at a discount to its face value and doesn't pay any coupon or interest payments. Instead, it's redeemed at face value at maturity, providing investors with a return equal to the difference between the purchase price and face value of the security. Therefore, the correct option is (C) - a single payment at maturity.

A Pure Discount Security Is an Interest-Bearing Asset That Pays