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3 years ago

How does an investor receive a return from a zero or very low coupon bond? (Select the best choice below.)

Business

1 answer:

Veronika [31]3 years ago

6 0

Answer:

A. From the appreciation of the bonds

Explanation:

Zero or very low coupon bond do not pay much (coupon) in their life (so C eliminated). They are sold at a deep discount to investor. As time pass, the value of the bond usually increases to approach face value (hence A).

Normally investor still have to pay for the imputed ("phantom") interest that comes from their real return (B eliminated)

If interest rate increases, the bond will decreases in value to create the required return the new buyer when they eventually sell it (D eliminated)

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4 years ago

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3 years ago

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4 years ago

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Please and thank you

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3 years ago

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3 years ago

How does an investor receive a return from a zero or very low coupon​ bond? ​(Select the best choice​ below.)

How does an investor receive a return from a zero or very low coupon bond? (Select the best choice below.)