Section B (2 Mark)Which of the following statements is TRUE concerning zero coupon bonds?

Investors cannot lock in a high rate of return because of the lack of an annual coupon.

The investor must pay taxes on the annual accrued interest even though no interest is actually received unless the bonds are held in tax-sheltered accounts

Zero-coupon bonds generally require the investor to switch to a coupon-bearing bond after a period of 5 years.

Large capital losses accrue when interest rates decline.