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    Zero coupon bond

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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 0f 7 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?

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    Solution Preview

    One thing you need to know about zero coupon bond is that it does not pay interest. It is sold at a lower price and matures at its face value. ...

    Solution Summary

    This solution helps with a question involving a zero coupon bond.