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A newly issued 20-year, $1,000, zero coupon bond just sold for $311.05. What is the implicit interest, in dollars, for the first year of the bond's life
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A newly issued 20-year, $1,000, zero coupon bond just sold for $311.05. What is the implicit interest, in dollars, for the first year of the bond's life

User Jakub Matczak
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5 votes

Answer: $18.70

Step-by-step explanation:

Based on the information given in the question, let the yield be represented by i

The beginning value of the coupon is $311.05.

The ending value is calculated as $329.75

Implicit interest will now be:

= $329.75 - $311.05

= $18.70

Check attachment for further explanation.

A newly issued 20-year, $1,000, zero coupon bond just sold for $311.05. What is the-example-1
User IpsRich
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