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You purchase a bond with an invoice price of $1,410. The bond has a coupon rate of 6.8 percent, and there are 3 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000.

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jepessoa

Answer:

clean price = $1,393

Explanation:

The clean price of the bond does not include any accrued interests. The invoice price = clean price + accrued interests

  • invoice price = $1,410
  • accrued interests = $1,000 x 0.068 x 3/12 = $17

clean price = invoice price - accrued interests = $1,410 - $17 = $1,393

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