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A corporation issues a bond at a price of 800. This bond will not pay interest during its entire term (i.e., it is a zero-coupon

A corporation issues a bond at a price of 800. This bond will not pay interest during its entire

term (i.e., it is a zero-coupon bond) and will be redeemed at maturity two years later at a price of

1000. What are the tax consequences to the holder and the issuer of the bond?

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