You buy a zero coupon bond at the beginning of the year that has a face value

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You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 6.3 percent, and 25 years to maturity. If you hold the bond for the entire year, how much in interest income will you have to declare on your tax return? Assume semiannual compounding.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Corporate Finance

ISBN: 978-0077861759

11th edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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