π Section/Student Qs for Lecture 7
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π Questions covered Tuesday Section, July 23
π£
β π Suppose my coupon rate = 10%, YTM = 8%, T = 7, and face value = 1000, the PV would be $1,104.12 according to the formula. At the end of the year, PV would be $1092.46 (T=6). Would the imputed interest income = $1092.46 - $1,104.12 = -$11.67? I wonder if this is how I should calculate the imputed interest income for this particular value. In that case, the imputed interest after-tax income would also be negative. Then, the total income after taxes would include the negative value. Somehow, the investor made less money.
β Find the answer here: Taxes and Discount Bonds
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