What impact can selling a zero-coupon bond before maturity have?

Selling a zero-coupon bond before maturity can indeed lead to a gain or loss compared to the original cost, which is why this choice is accurate. Zero-coupon bonds are purchased at a significant discount to their face value and do not make periodic interest payments. Instead, they appreciate in value as they approach their maturity date when the investor receives the face value.

If an investor sells a zero-coupon bond before it matures, the market price at which it can be sold may be higher or lower than what the investor initially paid. This is influenced by various factors, including interest rate movements, the remaining time until maturity, and overall market conditions. For instance, if interest rates rise after the bond is purchased, its market value may drop, leading to a loss if sold. Conversely, if interest rates fall, the bond’s market value may increase, allowing for a gain upon sale.

The other options are not viable because selling a zero-coupon bond does not guarantee a profit; it can certainly yield a loss based on market conditions. It also has significant financial implications, contrary to the suggestion that it has no financial implications, and it does not ensure investors receive their initial investment since the selling price can vary.