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Which statement is true about deep discount bonds?
- a)These are in the form of low interest bonds.
- b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.
- c)There is no interest payout during lock-in period.
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
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Which statement is true about deep discount bonds?a)These are in the f...
Deep Discount Bonds
Deep discount bonds are a type of bond that is sold at a discounted value, meaning investors can purchase them for less than their face value. These bonds are typically issued with a maturity period, after which the face value of the bond is paid back to the investors.
Key Features of Deep Discount Bonds:
- Discounted Value: Deep discount bonds are sold at a discounted price, offering investors an opportunity to buy them at a lower cost.
- Face Value Payment: On maturity, investors receive the face value of the bond, which is the amount the bond was originally issued for.
- No Interest Payments: Unlike regular bonds, deep discount bonds do not pay periodic interest during the lock-in period. Instead, all returns are received at the time of maturity.
Benefits of Deep Discount Bonds:
- Potential for Higher Returns: Due to the discounted purchase price, investors have the potential to earn higher returns when the bond matures.
- Tax Efficiency: Deep discount bonds can be tax-efficient for investors, as they may be subject to capital gains tax rather than regular income tax.
In conclusion, deep discount bonds are a unique investment option that can provide investors with the opportunity for capital appreciation upon maturity. While they do not offer regular interest payments, the discounted purchase price and potential for higher returns make them an attractive option for some investors.
Deep discount bonds are a type of bond that is sold at a discounted value, meaning investors can purchase them for less than their face value. These bonds are typically issued with a maturity period, after which the face value of the bond is paid back to the investors.
Key Features of Deep Discount Bonds:
- Discounted Value: Deep discount bonds are sold at a discounted price, offering investors an opportunity to buy them at a lower cost.
- Face Value Payment: On maturity, investors receive the face value of the bond, which is the amount the bond was originally issued for.
- No Interest Payments: Unlike regular bonds, deep discount bonds do not pay periodic interest during the lock-in period. Instead, all returns are received at the time of maturity.
Benefits of Deep Discount Bonds:
- Potential for Higher Returns: Due to the discounted purchase price, investors have the potential to earn higher returns when the bond matures.
- Tax Efficiency: Deep discount bonds can be tax-efficient for investors, as they may be subject to capital gains tax rather than regular income tax.
In conclusion, deep discount bonds are a unique investment option that can provide investors with the opportunity for capital appreciation upon maturity. While they do not offer regular interest payments, the discounted purchase price and potential for higher returns make them an attractive option for some investors.
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Which statement is true about deep discount bonds?a)These are in the f...
Deep discount bonds are very similar to zero coupon bonds. Only, these bonds are issued at deep discounts against the face value. For example - A bond having a face value of Rs. 1000 is sold at a price of Rs. 600. Notice that the amount of discount given to the buyer is of Rs. 400 (Certainly a deep discount, as the name suggests). These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.
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Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? for UGC NET 2024 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UGC NET 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer?.
Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? for UGC NET 2024 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UGC NET 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer?.
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Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Which statement is true about deep discount bonds?a)These are in the form of low interest bonds.b)These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.c)There is no interest payout during lock-in period.d)None of the aboveCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
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