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On January 1, 2018 you bought a zero coupon bond with 5 years to maturity at...

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Accounting

On January 1, 2018 you bought a zero coupon bond with 5 years tomaturity at $ 675. On January 1, 2019 this bond traded at $ 731.What would be your taxable income from holding this bond in 2018,if straight-line method for interest deduction were used?

a. $ 67.25

b. $ 56

c. $ 32.5

d. $ 65

e. $ 0

Answer & Explanation Solved by verified expert
3.8 Ratings (360 Votes)
Answer is 56 Particulars Amount in Trade Value 731 Maturity Value 675 56 Reason A zerocoupon bond is a debt security that does not pay interest but instead trades at a deep discount    See Answer
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