SIE practice questionmediumZero-coupon bonds
A zero-coupon bond is most suitable for which type of investor?
- AAn investor looking for a lump sum payment at maturity✓ Correct answer
- BAn investor who needs regular income
- CA retiree seeking tax-exempt income
- DAn investor wanting periodic interest payments
Explanation
Why A — An investor looking for a lump sum payment at maturity
Zero-coupon bonds pay no periodic interest and accumulate value until maturity, ideal for lump sum goals. They do not provide regular income or tax-exempt features.
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