Canan puchases a bond with a coupon rate of 9

Finance Jan 13, 2021

Canan puchases a bond with a coupon rate of 9.6 percent a face value of $1,000, an invoice price of $1.200. If there are five months to the next semiannual coupon date, what is the clean price of this bond?

Expert Solution

Here accured interest will be for 1 months , since payments are made semi annually

Thus accured interest = Face value x coupon rate x 1/12

= 1000 x 9.6% x 1/12

= 8 $

Thus clean price of bond = Invoice value - Accured interest

= 1200 - 8

= 1192 $

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