A zero coupon bond with a face value of $1,000 is issued with an initial price of $565.01. The bond matures in 20 years. What is the implicit interest, in dollars, for the first year of the bond's life? Assume semiannual compounding.
|Implicit interest for 1st six months||$ 8.12||=565.01*1.4375%|
|Implicit interest for 2nd six months||$ 8.24||=(565.01+8.12)*1.4375%|
|Implicit interest for first year||$ 16.36|
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