CDs sold at a steep discount from par and appreciate to face value at maturity are known as:

Question

Quizplus · Accepted Answer

CDs sold at a discount and grow to face value at maturity are known as zero coupon CDs. They do not pay periodic interest but instead are issued at a discount from  face value and grow to face value at maturity. The difference between the face value and the price paid at the time of purchase represents the interest earned on the CD, and this interest is subject to taxation in the year it accrues, despite the fact that it is not paid until maturity.

CDs Sold at a Steep Discount from Par and Appreciate