Question

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Check my work CO A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 5.6% and face value $1,000 Find the imputed interest income in: (a) the first year; (b) the second year; and (c) the last year of the bond's life. (Round your answers to 2 decimal places.) 1 points Imputed Interest First year еВook Second year Print Last year References 00

Answer 1

Given face value. :$ 1000 Yield to maturity (r): 5.6). Time 0) = 20 yrs constant yield. Fiv (ltojn a) at our know) the constant yield is = 1000 20 (1+5.61.po :: $336.29 At ist year the constant yield: 1000mg $ 355:13 (1+5:67319 Imouted interest income in the istyear is = 355:13-336:29 $18.84 $375.02 b) an gnd year the constant yield - 1000 . (1+5.67.)" ist year constant yieldis = $ 355:13 Imputed interest income int he and year=277 : 375.02-355:13 - $19.89.

c) - In 19th year we have the remaining maturity year. 'and the bond's faute value at zogearis 1000. constand gield at 19th year is 1000 (1+5.67.)? 1000 $ 946.97 . (1+516:25' Last year the bord value is $1000 Imputed interest in come in last year : 1000 - 946.97 $53.03 a) :: Imputed interest in istyear $18.84 b) imputed interest in and years $19.89 c) Imputed interest in last year- $ 53.03