Inconsistencies in calculating the interest that accrues to bonds due to application of straight line allocation is investigate. The authors suggest that compound interest should be appropriately calculated to avoid paradoxical outcomes.
bonds, interest allocation, amortization
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Greynolds, Jr., Elbert B. and Thomas, Arthur L., "Bonds Issued Between Interest Dates: What Your Textbook Didn't Tell You" (1983). Working Papers. 48.