You purchase a Eurobond in euros, at a quoted price of 101.5%. The annual coupon on the bond is 6%, and we are exactly one month after the past coupon date. You buy €100,000 of nominal value of this bond. What is your total expense?

Question

Quizplus · Accepted Answer

The Answer is The clean price of the bond is 101.5%. Accrued interest is equal to one month of coupon, or 30/360 *6%, given convention on the Eurobond market. Hence your total expense is:
(101.5% + 30/360*6%) *100,000€ =102,000 euros.

You Purchase a Eurobond in Euros, at a Quoted Price