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Coupons: Coupons have become a standard mechanism for sales promotions. Loss leader: The price of a popular product is temporarily reduced below cost in order to stimulate other profitable sales; Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery.
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The daily portion of the discount uses a compounded interest formula with the principal recalculated every six months. The following table illustrates how to calculate the original issue discount for a $7,462 bond with a $10,000 repayment and a three-year maturity date: [2]
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