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You purchased a bond with an invoice price of $3,714. The bond has a coupone rate of 4.2%, a face value of $3,000, and there are 4 months to the next semiannual coupone date. What is the clean price of this bond?

1 Answer

6 votes

Answer: $3693

Step-by-step explanation:

The clean price of this bond will be calculated as follows:

Invoice price of bond = $3714

Accrued interest = $3000 x 4.2% × ½) × 2/6

= $3000 × 0.042 × 0.5 × 2/6

= $21

Therefore, the clean price of the bond will then be:

= Invoice price - Accrued interest

= $3714 - $21

= $3693

Therefore, the the clean price of the bond is $3693.

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