Financial TQ – Quiz of the Day – A zero coupon bond

Quiz of the Day

A zero coupon bond is:

  1. An investment where you interest is mailed to you automatically on a regular basis, i.e. there is no coupon to clip.
  2. Are sold at a substantial discount to their face value. The difference between what you pay, and what you receive at maturity, is your interest.
  3. Actually a form of stock.
  4. Debt only offered by the U.S. Treasury
  5. Debt only offered by corporations.

Answer:  B. While most bonds pay interest on a regular—usually semi-annual basis—zero coupons don’t provide a steady stream of income.  You receive all of your interest when the bond matures.

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By |2017-01-10T17:45:32+00:00October 11th, 2015|Financial Tips|