A bond has a coupon rate of 6 percent and matures in 10 years. The next...
A bond has a coupon rate of 6 percent and matures in 10 years. The next semiannual interest payment will be paid 1 month from now. Which one of the following do you know with certainty concerning this bond?
A. The bond sells at a discount.
B. The bond sells at a premium.
C. The dirty price is higher than the clean price.
D. The clean price is higher than the dirty price. E. The market price exceeds the par value.
Homework Answers
option C:
Dirty price= clean price +accrued interest.
From the equation, Dirty price will be higher than the clean price for a bond.
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