2. Suppose that you are interested in buying a $1,000 par value bond that pays i

Question

2. Suppose that you are interested in buying a $1,000 par value bond that pays interest semi-annually. It has an annual coupon of8% with interest payable on June 15th and December 15th, The bond accrued interest is determined using a 30/360 day count street convention. If the bond is currently priced at 128,00 percent of par, what is the invoice price for the bond using a settlement date of December 12? Show your work. (5 points) a. $1,280.00 b. $1,294.75 C. $1,299.67 d. $1,309.50 e. $1,314.42 f, $1,319.33

Explanation / Answer

Invoice price of the bond = Bond clean price+Accrued interest

= $1,000×128%+$1,000×8%×176/360

= $1,280+$80×176/360

= $1,319.33

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