Question

Assume the bondâs quoted ("clean") price is $1,044.56, the bond has the coupon rate of 8.1% and that the coupons are paid semiannually. Further assume that the bond has the face value of $1,000. What is the bondâs invoice ("dirty") price if the last coupon payment took place four months ago?

Answer 1

$1,071.56

Step-by-step explanation:

Calculation for the

Clean price is the bond's invoice ("dirty") price

Using this formula

Dirty price= Clean price + ( Face value × Coupon rate × No. of months ÷ Total number of months in a year)

Let plug in the formula

Dirty price=$1,044.56 +($1,000 × 8.1% × 4 ÷ 12)

Dirty price= $1,044.56 + $27

Dirty price= $1,071.56

Therefore the bond's invoice ("dirty") price will be $1,071.56