Which of the Following Is Not True Regarding Zero-Coupon Bonds

Which of the following is not true regarding zero-coupon bonds?

A) They are issued at a deep discount from par value.
B) Investors are taxed annually on the amount of interest earned, even though the interest will not be received until maturity.
C) The issuing firm is permitted to deduct the amortized discount as interest expense for federal income tax purposes, even though it does not pay interest.
D) Zero-coupon bonds are purchased mainly for tax-exempt investment accounts, such as pension funds and individual retirement accounts.
E) All of the above are true.

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