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A bond with a coupon rate of 6% makes semiannual coupon payments on January 15 and July 15 of each year
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 100.0938. 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.)
Expert Solution
The Invoice Price of the bond
The Invoice Price of the bond = The Flat Price of the Bond + Accrued Interest for 15 Days [from January 15 to January 30]
Flat price = $1,000.94 [$1,000 x 100.0938%]
Semiannual Interest = $30.00 [$1,000 x 6.00% x ½]
Accrued Interest for 15 Days = $2.47 [$30.00 x (15 Days/182 Days)]
Therefore, the Invoice Price of the bond = The Flat Price of the Bond + Accrued Interest for 15 Days
= $1,000.94 + $2.47
= $1,003.41
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