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Basic Question 4 of 9
Consider a zero-coupon bond. Which compounding method yields a higher compounded total return?
B. Quarterly compounding
C. Both methods yield the same compounded total return.
A. Semi-annual compounding
B. Quarterly compounding
C. Both methods yield the same compounded total return.
User Contributed Comments 5
| User | Comment |
|---|---|
| jorellana9 | key word here is "total" |
| farhan92 | zero coupon is also a pretty important word here |
| chcarnes | Key word is "word" |
| dbedford | The key word is "retake" |
| Sagarsan88 | If zero coupon does not pay any coupon...what exactly is being compounded here? |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
calculate annual yield on a bond for varying compounding periods in a year
CFA® 2025 Level I Curriculum, Volume 4, Module 7.