On October 5, 2015, you purchase a $11,000 T-note that matures on August 15, 202
ID: 2639638 • Letter: O
Question
On October 5, 2015, you purchase a $11,000 T-note that matures on August 15, 2027 (settlement occurs two days after purchase, so you receive actual ownership of the bond on October 7, 2015). The coupon rate on the T-note is 4.391 percent and the current price quoted on the bond is 105.75 percent. The last coupon payment occurred on May 15, 2015 (145 days before settlement), and the next coupon payment will be paid on November 15, 2015 (39 days from settlement).
Calculate the accrued interest due to the seller from the buyer at settlement. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Calculate the dirty price of this transaction. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
On October 5, 2015, you purchase a $11,000 T-note that matures on August 15, 2027 (settlement occurs two days after purchase, so you receive actual ownership of the bond on October 7, 2015). The coupon rate on the T-note is 4.391 percent and the current price quoted on the bond is 105.75 percent. The last coupon payment occurred on May 15, 2015 (145 days before settlement), and the next coupon payment will be paid on November 15, 2015 (39 days from settlement).
Explanation / Answer
Details Amt $ T Note Price 11,000 Current quote is 105.75% T Note Par value 10,402 T Note coupon rate 4.391% Next coupon payment duration 184 days Accrued interest to seller duration 145 days Accrued interest to seller-amt = =10402*4.391/100*145/365 = 181 a So accrued interest to seller $ 181.45 b T Note clean price $ 11,000 T Note Dirty Price=Clean Price+Accrued Interest to seller= $ 11,181.45
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