on $1$ January $2020$ Piccassa purchased a debt instrument for its fair value of $$500,000.$ It had a principle amount $($par value$)$ of $$500,000$ and was due to mature in five year. The debt instrument carries fixed interest of $6\%$ paid annually in arrears and has an effective interest rate of $8\%.$ It is held at amortized cost.

Required:

a$.$ Explain what is meant by a $$compound$$ financial instrument.

b$.$ Calculate the amount at which the above financial instrument should be measured on $31$ December $2020,2021,2022,$ and $2024$