Answer:
Clean price is $3,977.22
Dirty price = $4110.99
Explanation:
We proceed as follows;
Semiannual coupon payments = $3000* 12%/2 = 6% * 3,000 = 6/100 * 3,000 = $180
Coupons are paid on 1st June and 1st December every year(semi-annually means twice a year, every 6 months)
No. of payments remaining = 11 (1 payment in 2020 on 1st December,2020 and 2 in each of the following 5 years)
Semiannual Yield = 6%/2 =3%
The clean price of the bond is given by
P = 180/1.03+ 180/1.03^2+.....+180/1.03^11+ 3200/1.03^11
=180/0.03*(1-1/1.03^11)+3200/1.03^11
=$3977.22
Dirty price = clean price +accrued interest
Accrued Interest = Interest from 1st June , 2020 to 1st December,2020
= no of days from 1st June to 15th October/no of days from 1st June to 1st December * $180
= 136/183*$180
=$133.77
So, Dirty price = $3977.22+$133.22 = $4110.99