Question

One of the bonds used to raise debt is zero coupon bonds. Which of the following statement is incorrect regarding Zero Coupon Bond?

Q: One of the bonds used to raise debt is zero coupon bonds. Which of the following statement is incorr

A zero-coupon bond is a debt security that does not pay interest but instead is issued at a deep discount and redeemed at par. The difference between the issue price and the redemption value is the return/profit earned. As such, zero coupon bonds do have a yield to maturity.

A Zero Coupon Bond do not pay any interest

B Yield to maturity is Nil as it pays no interest

C Investors buy Zero Coupon Bond at discount to face value

D Investors receive money on par at maturity

E All of the above are correct

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Question

One of the bonds used to raise debt is zero coupon bonds. Which of the following statement is incorrect regarding Zero Coupon Bond?

Solution

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