Calculate the amount of write-up or write-down in book value

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Reference no: EM131543712

On May 1, 1985, a bond with par value 1,000 and annual coupons at 5.375% was purchased to yield an effective annual interest rate of 5%. On May 1, 2000, the bond is redeemable at 1,100. The book value of the bond is adjusted each year so that it equals the redemption value of May 1, 2000. Calculate the amount of write-up or write-down in the book value in the year ending May 1, 1991.

Reference no: EM131543712

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