Describes the major drawback of zero-coupon bonds

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Which one of the following statements correctly describes the major drawback of zero-coupon bonds? a. Unless the bonds are held in tax-sheltered account, the investor must pay taxes on the annual accrued interest even though no interest is actually received .B The conversion feature that is found on most zero-coupon bonds generally requires the investor to switch to a coupon-bearing bond after a period of 5 years. b. Because there is no reinvestment of a coupon, large capital losses accrue when interest rates decline. c. The lack of an annual coupon basically prohibits the investor from locking in a high rate of return

Reference no: EM131328104

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