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12 January, 23:19

Apisco Tiger Inc. has a 6.6 percent semi-annual coupon bond outstanding. The face value of the bond is $1,000. The bond is being sold at a time with four months left to the next coupon payment date. What is the bond's clean price if it's dirty price is $976.00?

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  1. 13 January, 01:44
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    the bond's clean price is $965

    Explanation:

    The clean price of a bond is given by the following formula:

    Clean Price = Dirty Price - Accrued Interest

    since the bond pays interest every 6 months, and there are 4 months left until the next coupon payment, 2 months have past since it paid its coupon for the last time.

    accrued interest = (2 months / 12 months) x 6.6% x $1,000 = $11

    dirty price = $976

    Clean price = $976 - $11 = $965
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Home » Business » Apisco Tiger Inc. has a 6.6 percent semi-annual coupon bond outstanding. The face value of the bond is $1,000. The bond is being sold at a time with four months left to the next coupon payment date.
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