Which one of the following statements correctly describes the major drawback of a zero-coupon bond?
A) Unless the bond is held in a tax-sheltered account, the investor must pay taxes on the annual accrued interest even though no interest is actually received.
B) The conversion feature found on most zero-coupon bonds generally requires the investor to switch to a coupon-bearing bond after a period of 5 years.
C) The lack of an annual coupon basically prohibits the investor from locking in a high rate of return.
D) Because there is no reinvestment of a coupon payment, large capital losses accrue when interest rates decline.
Answer: A
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A) low-income country. B) upper-middle-income country. C) lower-middle-income country. D) upper-income country. E) lower-upper-income country.
Which of the following increases owner's equity?
A. Business profits B. Business expenses C. Business losses D. Dividends
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a. True b. False Indicate whether the statement is true or false
A golden parachute is a prearranged contract with managers specifying that, in the event of a hostile takeover, the target company managers will be paid a significant severance package.
Answer the following statement true (T) or false (F)