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#1
10-29-2019, 07:35 PM
 Not Paul Member SOA Join Date: Mar 2019 College: St. Edwards University Posts: 108
What is Accumulation of discount?

I'm working on a problem involving bonds and it includes the following statement: "The amount for accumulation of discount in the seventh coupon payment is 4.36."

What does the phrase "accumulation of discount" mean and what are the related formulas? I've assumed a relationship to "amortization of premium" but that did not help me solve the problem in under five minutes.
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#2
10-29-2019, 08:14 PM
 Sullinator Member SOA Join Date: Aug 2018 College: West Chester Universiy Posts: 290

Accumulation of discount is the principle for a discount bond. Equation is “-4.36=(Fr-Ci)V^(n-t+1)”.
#3
10-30-2019, 01:44 AM
 Not Paul Member SOA Join Date: Mar 2019 College: St. Edwards University Posts: 108

That negative sign in front of the 4.36 made all the difference.

Thank you!
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