A zero-coupon bond pays no interest. Explain.

A zero coupon bond is a bond that is sold now at a discount and will pay its face value when it matures. No interest payments are made.

How does the price-yield relationship for a callable bond compare to the same relationship for an option-free bond? The price-yield relationship is best described as exhibiting: negative convexity at low yields for the callable bond and positive convexity for the option-free bond the same convexity for both bond types negative convexity for the callable bond and positive convexity for an option- free bond

e) Why do we say a coupon bond can beseen as a package of zero-coupon bonds?Please use anumerical example forillustration.