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Suppose a bond is purchased between coupon periods. The number of days between the settlement date and the next coupon payment date are 94. There are a total of 185 days between the past coupon payment date and the next coupon payment date. The bond has a coupon rate of 6.4% and pays coupons semiannually. The bond has a term to maturity of just under 7 years (the bond has 14 remaining cash flows to be received-13 coupon payment dates prior to maturity plus the final coupon plus principal payment at the maturity date). Assume a par value of $1,000.

Assuming a discount rate of 7.5%, what is the clean price of this bond?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92400317

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