Question

A bond pays a semiannual coupon, and the last coupon was paid 61 days ago. If the annual coupon payment is $75, what is the accrued interest

Answer 1

$12.57

Step-by-step explanation:

Calculation for the accrued interest

Using this formula

Accrued interest =(Annual coupon payment/2) * (The numbers of days the last coupon was paid/182)

Note that Semiannual means the that annual coupon payment happened twice in a year which is from January to June and from July to December and Secondly let assumed that we have $182 days in the 6 months period.

Let plug in the formula

Accrued interest=(75/2) × (61/182)

Accrued interest=37.5*0.33516

Accrued interest=$12.57

Therefore the Accrued interest will be $12.57