You purchase 30 bonds with a coupon rate of 5.875% and a current market price of 89. The commission charge is $15.00 per bond. The date of the transaction is September 1, and the bond pays interest on January 1 and July 1. What is your total purchase price?

Question

Quizplus · Accepted Answer

The total purchase price is the sum of the bond price, commission, and accrued interest. The bond price is 30 * 89 = $2,670. The commission is 30 * $15 = $450. The accrued interest is (5.875% / 2) * 30 * (91 / 360) = $370.63. Therefore, the total purchase price is $2,670 + $450 + $370.63 = $27,590.63.

You Purchase 30 Bonds with a Coupon Rate of 5