Question

A semi-annual coupon Corporate bond was purchased for settlement on January 5, 2013. The last coupon was paid on September 15, 2012. Using the 30/360 day count convention, answer the following questions: a. on what date will the next coupon be paid? b. how many days passed between the last coupon paid and the settlement date? c. how many days are there in the current coupon period?

Answer 1

a) Semi annual coupon corporate bond was purchased on 5 January 2013 and the last coupon was paid on 15 September, 2012. Hence, coupon payment dates are 15 September and 15 March. So, next coupon payment will be made on 15 March, 2013.
b) Last coupon was paid on 15 September, 2012 and the settlement date is 05 January, 2013, the number of days involve between these two dates using 30/360 day count convention is :
September- 16 days (15 to 30 september)
October- 30 days
November- 30 days
December- 30 days
January- 5 days
Total - 111 days
c) Next coupon date is 15 March 2013. Hence the number of days in current coupon period using 30/360 day count convention is (25 days of January + 28 days of February + 15 days of March)= 68 days.