Question

You purchase a bond with an clean price of $1,129. The bond has a coupon rate of 10 percent, and there are 4 months to the next semiannual coupon date. What is the dirty price of the bond

Answer 1

Answer:

The answer is "1145.66".

Explanation:

Using formula:

$\text{Dirty price = Clean price + accrued interest}$

                  $= 1,129 +100\times 0.5\times \frac{2}{6} \\\\= 1,129 +50\times \frac{2}{6} \\\\= 1,129 + \frac{100}{6} \\\\= \frac{6774+100}{6} \\\\= \frac{6874}{6} \\\\=1145.66$

OR

$=\ 1,129+(10\% \ of\ 1000)\times \frac{2}{12}\\\\=\ 1,129+(\frac{10}{100} \times \ 1000)\times \frac{2}{12}\\\\=\ 1,129+(100)\times \frac{2}{12}\\\\=\ 1,129+ \frac{200}{12}\\\\=\ 1,129+ 16.666667\\\\=\ 1,145.666667$