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Question
What is Zero Coupon Bond?
Short Answer
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Solution
A bond with no fixed interest rate is known as a zero-coupon bond. Such bonds are offered at a significant discount to investors in order to recompense them. The difference between the issue price and the redemption price represents the total interest that the bond will disperse over its term. The Statement of Profit and Loss annually charges a corresponding fraction of the total interest throughout the bond’s life.
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