Question

Which of the following statements is/are true?  

Multiple Choice

• A. The rate of return required by the market on a bond that is held until maturity is called the coupon rate.

• B. A zero coupon bond is one that initially sells at a discount and only makes one payment to bondholders.

• Both A and B are true.

• Neither A nor B are true.

Answer 1

Basically in this question, there are 4 options.

• Option A states that the rate of return required by the market on a bond that is held until maturity is called the coupon rate.
• Option B states that a zero coupon bond is one that initially sells at a discount and only makes one payment to bondholders.
• Option C: Both are correct
• Option D: None are correct.

Option A is incorrect because the statement describes YTM not the coupon rate. This automatically makes option C incorrect too.

Option B correct;y describes a zero coupon bond. So it is correct. And this automatically makes option D incorrect that none of the statements is true.

So option B is true.