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

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Finance

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

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4.2 Ratings (664 Votes)

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

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Transcribed Image Text

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

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