Question
A zero coupon bond with a face value of $1,000 is issued with an initial price...
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.
Homework Answers
Answer #1
| 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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