Question

A coupon bond that pays semiannual interest is reported in the Wall Street Journal as having an ask price of 111% of its $1,000 par value. If the last interest payment was made 2 months ago and the coupon rate is 5.40%, the invoice price of the bond will be _________.

Answer 1

$2,220

Step-by-step explanation:

Calculation for what the invoice price of the bond will be

Invoice price = 1.11(1,000) + 30(2/0.054)

Invoice price =1,110+30(37)

Invoice price=1,110+1,110

Invoice price=$2,220

Therefore the invoice price of the bond will be $2,220