QUESTION 30 Which of the following is true about zeroes ie z

QUESTION 30 Which of the following is true about \"zeroes\" (ie. zero-coupon bonds)? Zeroes sell at a premium comparedto other bonds O Zeroes pay more interest than a Treasury bill O Zeroes are only issued by US corporations Zeroes only receive payment from price appreciation Zeroes have a shorter maturity than other bonds Click Save and Submit to save and submit. Chick Save All Answers to save all answers.

Solution

Answer: 2^nd option

T-bill is backed by the US government; this is for short-term (less than 1 year) purpose; its income is very certain because of such government backing; therefore, investing in such is less risky.

On the other hand zero-coupon bonds can be issued by corporations; investing in such may be a risky affair.

As per the rule risky investment gives higher returns and less-risky investment. It means interest of zeros would be higher than T-bill.