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A corporate bond G, is sold for settlement on 16 June 2018. Itis a semi-annual...

A corporate bond G, is sold for settlement on 16 June 2018. It is a semi-annual coupon paying bond with 5% coupon rate. It makes coupon payment on April 10th and October 10th each year. The maturity date of bond G is 10/10/2020.

What is its full price, accrued interest and clean price on settlement date if it has 4% yield to maturity (30/360 convention)?

Solutions

Expert Solution

1. Clean Price of bond = $1021.86

2. Interest accrued = Interest per semi annual period * difference between 10th April to 16 June / Days in Each semi annual period

Interest accrued = 1000 * 5%/2 * 66 / 180

Interest accrued = $9.167

3. Full Price = Clean Price + interest accrued

Full Price = 1021.86 + 9.167

Full Price = $1031.03

jeff jeffy answered 2 years ago
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