A $10,000 bond with semi-annual coupons at j₂ = 9% maturing at par on Sept 30,2016 has a price on March 30,2010 of $9,088.29 at a yield rate of j₂ = 11%.Using the method most commonly used in practice,what is the total purchase price (full or dirty price)on July 21,2010 at the same yield rate of j₂ = 11%?

Question

Quizplus · Accepted Answer

The full or dirty price includes the accrued interest from the last coupon date to the purchase date. Calculate the accrued interest from March 30, 2010, to July 21, 2010, and add it to the bond's price on March 30, 2010, to find the full price.

A $10,000 Bond with Semi-Annual Coupons at J2 = 9

A $10,000 Bond with Semi-Annual Coupons at J₂ = 9