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Rob's s1452 Notes

πŸ™‹ Section/Student Qs for Lecture 7

Agenda for Tuesday Section, July 23 βœ…

  • Slide Review, concentrating on the most important and challenging slides from this week’s lecture.
  • Pages about this lecture on this website. Read 🧭 Getting Oriented for how to find them on the site.
  • Office Hours. Click here for notes and timestamps. Email office hour questions to robecon1452@gmail.com and I will cover them next section.

Click here to learn about timestamps and my process for answering questions.

πŸ“… Questions covered Tuesday Section, July 23

πŸ•£
❔ πŸ™‹ 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.

βœ” Find the answer here: Taxes and Discount Bonds

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