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Nathan is buying a $1,000 face value bond at a quoted price of 101.364. The bond carries a coupon rate of 7.75 percent, with interest paid semiannually. The next interest payment is two months from today. What is the dirty price of this bond

Respuesta :

Answer:

$1,039.47

Explanation:

Data provided in the question

Face value = $1,000

Quoted price = $101.364

Coupon rate = 7.75%

So by considering the above information, the dirty price of this bond is

= Clean price + accrued interest

where,

Clean price is

= $1,000 × 101.364%

= $1,013.64

And, the accrued interest is

= $1,000 × 7.75% × 4 months ÷ 12 months

= $25.83

So, the dirty price of the bond is

= $1,013.64 + $25.83

= $1,039.47

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