Which of the Following Statements Is True About a Zero

Multiple Choice

Which of the following statements is true about a zero coupon bond?

A) A zero coupon bond is taxed as a capital gain at the time the bond matures.
B) A zero coupon bond is issued at a substantial discount below its par value.
C) A zero coupon bond is issued at a coupon rate that adjusts for inflation.
D) The interest received every year on a zero coupon bond is taxed as interest income.
E) The discount on the issue of a zero coupon bond is written off over its life in the investor's financial statement.