Suppose today is Oct 23, 2013. A bond with a 10% coupon paid semiannually every

Question

Suppose today is Oct 23, 2013. A bond with a 10% coupon paid semiannually every February 15 and August15 is listed as selling at an ask price of 102:11. If you buy the bond from a dealer today, what invoice price (dirty price) will you pay for it? The coupon period has 182 days.
Suppose today is Oct 23, 2013. A bond with a 10% coupon paid semiannually every February 15 and August15 is listed as selling at an ask price of 102:11. If you buy the bond from a dealer today, what invoice price (dirty price) will you pay for it? The coupon period has 182 days.
Suppose today is Oct 23, 2013. A bond with a 10% coupon paid semiannually every February 15 and August15 is listed as selling at an ask price of 102:11. If you buy the bond from a dealer today, what invoice price (dirty price) will you pay for it? The coupon period has 182 days.

Explanation / Answer

Solution:-

Invoice price = Ask price + accrued interest

Ask price = FV * 102 .11%

Accrued interest = FV * rate * Days since last coupon date / 364

= 1000 * 102.11% + 1000*10%* 112/364

= 1051.87

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