Which of the following statements is true?
A)Zero-coupon corporate bonds are bonds without any intervening cash flows between issue and maturity and thus these bonds typically sell at a large discount from face value.
B)Zero-coupon corporate bonds are bonds with semi-annual cash flows between issue and maturity and thus these bonds typically sell at a large discount from face value.
C)Zero-coupon corporate bonds are bonds without any intervening cash flows between issue and maturity and thus these bonds typically sell at a small discount from face value.
D)Zero-coupon corporate bonds are bonds with annual cash flows between issue and maturity and thus these bonds typically sell at a large discount from face value.

Question

Quizplus · Accepted Answer

Zero-coupon corporate bonds do not have any intervening cash flows between issue and maturity, and thus do sell at a large discount from face value. Semi-annual or annual cash flows would make them regular bonds, not zero-coupon bonds.

Which of the Following Statements Is True