Question

1. Which is the following is not true?
   1. Zero-coupon bonds always mature earlier than coupon bonds
   2. Bonds that pay no annual interest (coupons) but are sold at a discount below par, thus compensating investors in the form of capital appreciation are called zero-coupon bonds
   3. A provision in a bond contract that gives the issuer the right to redeem the bonds under specified terms prior to the normal maturity date is a call provision
   4. Original maturity refers to the number of years to maturity at the time a bond is issued

2. The first step in time value analysis is to set up a ______________ which will help you visualize what’s happening in a particular problem?
   1. deadline
   2. timeline
   3. location
   4. calculation

Answer 1

Answer 1)

The Option 1 is not true. Zero-coupon bonds always mature earlier than coupon bonds.

it is not necessary that the Zero - Coupon Bonds are matured earlier than the Non Zero Coupon Bonds.

Answer 2)

The first step in time value analysis is to set up a timeline which will help you visualize what’s happening in a particular problem.

Since we are analysing the time value, we need to determine at what time what is happening.

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