Question

Which of the following are called deep discount bonds ?
(a) Zero interest debentures
(b) Zero coupon bonds
(c) Secured premium notes
(d) Callable bonds​

Answer 1

Option b is the right answer

Answer 2

Which of the following are called deep discount bonds ?

(a) Zero interest debentures

(b) Zero coupon bonds

(c) Secured premium notes

(d) Callable bonds​

The correct answer is :

(b) Zero coupon bonds

Explanation :

Zero coupon bonds is called deep discount bonds.

A deep-discount bond is a bond that is sold for much less than its par value. Deep discount bonds are sold at a discount of 20% or more. Deep discount bond yields are significantly higher than current rates for fixed-income securities with similar profiles.

A zero-coupon bond refers to a debt security where interest is not paid. Rather, it trades at a deep discount. When the bond is redeemed for its full face value, it offers a return on maturity.

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