Question

Nina's Construction Bonds carry a 4% coupon, mature on 4/1/2030 and pay coupons on 10/1 and 4/1 each year using a 30/360 accrual convention.

Given this information, what is the accrued interest if you owned $30,000 par value as of the end of the day
March 15th, 2024?

Answer 1

30 /360 convention assumes that each month has 30 days and each year has 360 days.

so, on end of march 15, 2024.

5 months and 15 days are over from last coupon payment.

=> (5 months *30 days each) + 15 days

=>165 days.

so the amount of accrued interest = par value * coupon rate *164 days/ 360 days

=>$30,000*4%*165/360

=>$550.00.