You are buying a bond at a clean price of $1,140.The bond has a face value of $1,000, a coupon rate of 3.8 percent, and pays interest semiannually.The next coupon payment is one month from now.What is the dirty price of this bond?

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Quizplus · Accepted Answer

The dirty price of a bond is the clean price plus the accrued interest. The accrued interest is the amount of interest that has accrued since the last coupon payment. In this case, the last coupon payment was one month ago, so the accrued interest is one month's worth of interest, or $15.83. The dirty price of the bond is therefore $1,140 + $15.83 = $1,155.83.

You Are Buying a Bond at a Clean Price of $1,140.The