Question

You are buying a bond at a quoted price of $887. The bond has a 5.5 percent coupon and pays interest semiannually on February 1 and August 1. What is the invoice price of this bond if today is April 1? Assume a 360-day year.

Answer 1

2 Dirty price of bono Ans=) quated price of bond - $ 887 Coupon Rate of bond - 5.5% poy interest Semionnually Coupon Rate semnalannualy = 5:572 * 2.25%. first payment on Feb 14 second on August 1 Invoice price of bond Face Valie of bond = $ 1000 Invoice price is also called as quoted price of bond is also called clean price of bond- We assume that every month has 30 day since in question it is you of 360 day (12 x 30 = 360) duration between 1 Feb to 14 April 2x30 Bond hold duration in year = 30/60 year Invoice prtce Clean price & Accrued Interest /dirty price where Acc. Interest, face valuex coupon x to yearson bond hold semiamual 887+ (1000x 5192 * 6%360) Invoice Price = $891.583 diny price given that = Godays of bond rate In A