Examveda

Type of bonds that pays no coupon payment but provides little appreciation are classified as

A. depreciated bond

B. interest bond

C. zero coupon bond

D. appreciation bond

Answer: Option C

Solution (By Examveda Team)

Type of bonds that pays no coupon payment but provides little appreciation are classified as zero coupon bond. A zero-coupon bond is a bond where the face value is repaid at the time of maturity. Note that this definition assumes a positive time value of money. It does not make periodic interest payments, or have so-called coupons, hence the term zero-coupon bond.

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