Suppose that today's date is April 15. A bond with a 5.5% coupon paid semiannually every January 15 and July 15 is quot...

Question

Question

Suppose that todays date is April 15. A bond with a 5.5% coupon paid semiannually every January 15 and July 15 is quoted as

Answer 1

Answer #1

Invoice price = Ask price (or Clean price) + Accrued interest rate for 3 months

Semi - annual interest rate = 5.5% / 2 = 2.75%

Assuming a $1000 bond -

Invoice price = $1000 x 101.25% + $1000 x 2.75% x (3/6) = $1026.25

Answer 2

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