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5. Accrued interest problem I An investor purchases a bond on September 5. Coupons are paid semi-annually on Febru- ary 15 and August 15.

5. Accrued interest problem I An investor purchases a bond on September 5. Coupons are paid semi-annually on Febru- ary 15 and August 15. The market uses the 30/360 convention. (a) How much is accrued interest on September 5? (b) If the clean price is 105, how much does the investor pay for the bond on September 5? (c) The investor sells the bond on November 25 at the clean price 102. What is the realized rate of return?

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