Assume you buy a bond with a face value of $1,000, maturity of 5 years, and...

Assume you buy a bond with a face value of $1,000, maturity of 5 years, and a coupon rate of 7%. Assume that the YTM remains constant and equal to 7% throughout the life of the bond. What will be your accumulated interest income by the time the bond matures?

Expert Solution

Year	Interest	FVIF at 7%	FV at 7%
1	$ 70.00	1.31080	$ 91.76
2	$ 70.00	1.22504	$ 85.75
3	$ 70.00	1.14490	$ 80.14
4	$ 70.00	1.07000	$ 74.90
5	$ 70.00	1.00000	$ 70.00
Accumulated interest income at maturity			$ 402.55

jeff jeffy answered 10 months ago

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