Question

A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year The Wall Street Journal reports the ask price for the bond on January 30 at 100 250, What is the invoice price of the bond? The coupon period has 182 days. (Do not round intelmediate calculations. Round your answer to 2 decimal places.) Invoice price

Answer 1

Par value =       1000  
Coupon rate =       6.00%  
Coupon rate for 182 days period = 6%*182/365=       0.02991780822  
last Coupon Payment date is January 15. Today is January 30. So last coupon is paid 15 days before Settlement date.          
So interest is accrued for days =       15  
Interest formula = Par value * interest rate for period          
1000*0.02991780822          
29.91780822          
          
So interest accrued is       $29.92  
          
price Quoted =       100.25%  
clean price = Par Value *quoted %          
1000*       100.25%  
1002.5          
          
invoice price = Clean price + ínterest accrued          
1002.5   +   $29.92  
$1,032.42          
So invoice price is       $1,032.42  

Note: separate one question is answered as per HOMEWORKLIB POLICY