Davidson Industrial bonds have a current market price of $992 and a 5% coupon. The bonds pay interest semiannually on March 1 and September 1. Assume today is January 1. How many months of accrued interest are included in the dirty price of these bonds?

Question

Quizplus · Accepted Answer

Accrued interest is the interest that has accumulated since the last interest payment date. Since the last payment was on September 1 and today is January 1, there are four months of accrued interest (September, October, November, December).

Davidson Industrial Bonds Have a Current Market Price of $992