Nina's Construction Bonds carry a 4% coupon, mature on 4/1/2030 and pay coupons on 10/1 and...

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?

Solutions

Expert Solution

accrued interest = par value * coupon rate * (number of days since last coupon payment / 360)

As per the 30/360 accrual convention, each month has 30 days.

Last coupon payment was on 10/1.

Therefore, number of days since last coupon payment = 20 + 30 + 30 + 30 + 30 + 15 = 155 days

accrued interest = $30,000 * 4% * (155 / 360)

accrued interest = $516.67

jeff jeffy answered 2 years ago

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