Which of the following statements about zero coupon bonds is FALSE?
A) When the bonds mature, the issuing firm is faced with a small cash outflow relative to the cash inflow the firm receives when the bonds are initially issued.
B) Zero coupon bonds have lower interest rate risk than bonds with high coupons.
C) Zero coupon bonds are an extremely popular way for corporations to borrow money.
D) Most zero coupon bonds in the U.S. are government issues.
Correct Answer:
Verified
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B)
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