Question

a. A bond pays a semiannual coupon, and the last coupon was paid 61 days ago. If the annual coupon payment is $75, what is the accrued interest? (Assume 182 days in the 6-month period)

b. What is the invoice price if the quoted price is 97.2? (Assume par value is $1000)

Answer 1

Answer of Part a:

Accrued Interest = ($75 /2) * (61 /182)
Accrued Interest = $37.5 * 0.34
Accrued Interest = $12.57

Answer of Part b:

Quoted Price = $1,000 * 97.2%
Quoted Price = $972

Invoice Price = Quoted Price + Accrued Interest
Invoice Price = $972 + $12.57
Invoice Price = $984.57