Interest earned, predicting

Because bonds typically have a predictable stream of payments of interest and repayment of principal, many people invest in them to receive interest income or to preserve and to accumulate capital. If you are looking for current income, you will most likely be interested in bonds that pay an interest rate that stays fixed until maturity with interest that is paid semiannually. However, if you are saving for retirement or a child s education or other capital accumulation goal, you may wish to consider investing in zero coupon bonds which do not have periodic interest payments. Instead, they are sold at a substantial discount from their face amount and the investor receives one payment— at maturity—that is equal to the purchase price (principal) plus the total interest earned, compounded semiannually at the original interest rate. 

David A. Dixon is a Battelle fellow in the Fundamental Science Directorate at the Pacific Northwest National Laboratory (PNNL), where he previously served as associate director for theory, modeling, and simulation at the William R. Wiley Environmental Molecular Sciences Laboratory. His main research interest is the use of numerical simulation to solve complex chemical problems with a primary focus on the quantitative prediction of molecular behavior. He uses numerical simulation methods to obtain quantitative results for molecular systems of interest to experimental chemists and engineers with a specific focus on the design of new materials and production processes. Before moving to PNNL, he was research fellow and research leader in computational chemistry at DuPont Central Research and Development (1983-1995) and a member of the Chemistry Department at the University of Minnesota, Minneapolis (1977-1983). He earned his B.S. in chemistry from the California Institute of Technology and his Ph.D. in physical chemistry from Harvard University, where he served as a junior fellow of the Society of Fellows, Harvard University. He is a fellow of the American Association for the Advancement of Science, and a fellow of the American Physical Society. He is a recipient of the 1989 Leo Hendrik Baekeland Award presented by the American Chemical Society, the Federal Laboratory Consortium Technology Transfer Award (2000), and the 2003 American Chemical Society Award for Creative Work in Fluorine Chemistry. 

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