A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 a

Question

A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at 100:03. What is the invoice price of the bond? The coupon period has 182 days. (Do not round intermediate calculations.Round your answer to 2 decimal places.)

A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at 100:03. What is the invoice price of the bond? The coupon period has 182 days. (Do not round intermediate calculations.Round your answer to 2 decimal places.)

Explanation / Answer

The reported bond price is: 100 3/32 percent of par = $1,000.9375

15 days have passed since the last semiannual coupon was paid, so there is an accrued interest, which can be calculated as:

Accrued Interest =
Annual Coupon Payment
×
Days since Last Coupon Payment
2 Days Separating Coupon Payment

= $30 × (15/182) = $2.4725
The invoice price is the reported price plus accrued interest:

$1,000.9375 + $2.4725= $1,003.41

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.