Question

Suppose that a Treasury coupon security is purchased on April 8 and that the last coupon payment was on February 15. Assume that the year in which this security is purchased is not a leap year.

---Answer the following questions.
(b) If the coupon rate for this Treasury security is 7% and the par value of the issue purchased is $1 million, what is the accrued interest?

Answer 1

Accrued Interest = 53 days x Daily interest of 191.78 = $10,164.34

Step-by-step explanation:

Suppose that a Treasury coupon security is purchased on April 8 and that the last coupon payment was on February 15. Assume that the year in which this security is purchased is not a leap year.

If the coupon rate for this Treasury security is 7% and the par value of the issue purchased is $1 million, what is the accrued interest?

Interest per day = 0.07 x 1,000,000 / 365 =191.78

Feb 15 to Apr 8 = 53 days

Accrued Interest = 53 days x Daily interest of 191.78 = $10,164.34