Let us find the clean Price of Bond as on 8/1/2019 | |
Par value of Bond | $ 1,000.00 |
Semi annual coupon @7% pa= | $ 35.00 |
Remaining maturity period on 07/1/2019 =4 years | |
Remaining Coupon payments due =8 nos | |
YTM =6% | |
Semi annual YTM =3% | |
PVIF Factor @3% for 8 period =(1-1.03^-8)/3% = | 7.0197 |
PV factor @3% for 8 period =1/1.03^8= | 0.7894 |
Finding the Bond Price from the PV of Cash flows | |||
Cash flows | Amt $ | PVIF /PV factor | PV of Cash flows |
Coupon payment for 8 periods | $ 35 | 7.0197 | $ 245.69 |
Maturity Value | $ 1,000 | 0.7894 | $ 789.41 |
Total of PV of Cash flows | $ 1,035.10 |
So Clean Price of Bond =$1,035.10 | |
Accumulated Interest till 8/1/2019=1000*7%*1/12= | $ 5.83 |
So Dirty Price with accrued interest on 8/19/19= | $ 1,040.93 |
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