Question

Which of the following statements is true of zero coupon bonds?

A) Zero coupon bonds have no coupon payments over its life and only offer a single payment at maturity.
B) Zero coupon bonds sell well below their face value (at a deep discount) because they offer no coupons.
C) The most frequent and regular issuer of zero coupon securities is the U.S. Treasury Department.
D) All of the above are true.

Answer 1

Zero coupon bonds have no coupon payments over its life and only offer a single payment at maturity. They sell well below their face value (at a deep discount) because they offer no coupons. The U.S. Treasury Department is the most frequent and regular issuer of zero coupon securities.

Step-by-step explanation:

Zero coupon bonds are bonds that do not make any coupon payments over their life and only offer a single payment at maturity. These bonds are sold at a deep discount to their face value because they do not offer any coupons. The U.S. Treasury Department is the most frequent and regular issuer of zero coupon securities.