Suppose you purchase a zero coupon bond with a face
value of $1,000, maturing in 19 years, for $213.95. Zero coupons pays the
investor the face value of the maturity date. What is the implicit interest in
the first year of the bonds life?
Thank you for the opportunity to help you with your question!
we have to find the rate that makes 213.95 to grow to 1000 in 19 years
1000 = [213.95*19]/x
and 4.06% of 213.95 is
A= 8.68 $ implicit interest in the first year of the bonds life
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Jul 7th, 2015
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