SIE practice questioneasyZero-coupon bonds
Which characteristic applies to a zero-coupon bond?
- APays interest semiannually
- BIssued at a discount and pays no periodic interest✓ Correct answer
- CUsually callable
- DBacked by revenues from a project
Explanation
Why B — Issued at a discount and pays no periodic interest
Zero-coupon bonds pay no interest until maturity and are issued at a discount. They are typically not callable and are not backed by project revenues.
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