Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you explain on how in accrued interest got 2 divided by 6 Suppose you buy a bond with a 12% annual coupon, payable semiannually.

Can you explain on how in accrued interest got 2 divided by 6

image text in transcribed

Suppose you buy a bond with a 12% annual coupon, payable semiannually. On the day you buy it, the next coupon is due in four months. If the bond's quoted price (i.e., its clean price) is $1,060, what is accrued interest and the price you actually pay (i.e., its dirty price) for this bond? Accrued interest =($60)x(2/6)=$20 Dirty Price=$1,060+$20=$1,080

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Finance With Excel

Authors: Simon Benninga, Tal Mofkadi

3rd Edition

0190296380, 9780190296384

More Books

Students also viewed these Finance questions