Question

The bond has a coupon rate of 6.17 percent, it makes semiannual payments, and there are 4 months to the next coupon payment. A clean price of $983 and the par value is $1,000. What is the invoice price? 57:28 Multiple Choice o $1,013.85 o О $95215 o O 399328 o O s962 43 o О $97272

Answer 1

Accrued interest for the past 2 months after last coupon payment, can be computed as:

Accrued interest = Periodic coupon payment x 2/6

= 0.0617/2 x $ 1,000 x 2/6

= 0.03085 x $ 1,000 x 0.33 = $ 10.283

Invoice price = Clean price + Accrued interest

= $ 983 + $ 10.283 = $ 993.283

Hence option (C) is the correct answer.

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