Q643
Bonds that does not pay any interest rate are considered as
A.
interest free bond
B.
zero coupon bond
AnswerC.
price less coupon bond
D.
useless price bonds
Answer: Option B
Solution
Answer: Option B
Solution:
Bonds that does not pay any interest rate are considered as zero coupon bond. A zero-coupon bond is a debt security instrument that does not pay interest. Zero-coupon bonds trade at deep discounts, offering full face value (par) profits at maturity. The difference between the purchase price of a zero-coupon bond and the par value, indicates the investor's return.