Question

On Monday, May 15, 2017, you bought (traded) the XZX, Inc. 8.25% corporate bonds with a trading value of $96.50 price. The coupon payments are paid on March 31 and September 30. Using the 360-day accrual basis, calculate the invoice price of the bond. Please use T+3 to calculate the settlement day.

Answer 1

Answer:

$97.53

Explanation:

Coupon rate = 8.25%

Flate price of bond= $96.50

FV of bond (assumed) = $100

Purchase date = May 15

Last coupon payment was made on March 31, Accrued Interest = Face value * Days since last payment * Interest rate / Days in current coupon period

Accrued Interest = Face value * Days since last payment * Interest rate / Days in current coupon period

Accrued Interest = $100 * (May 15-March 31) * 8.25% / (2*(September 30-March 31))

Accrued Interest = $100*45*8.25% / (2*180)

Accrued Interest = $1.03

Invoice Value = Flate price + Accrued Interest

Invoice Value = $96.50 + $1.03

Invoice Value = $97.53