Question

A five-year par value $10,000 5% bond with quarterly coupons is bought to yield 6% convertible quarterly. Determine the practical dirty and clean values of the bond one month after the eighth coupon payment using the 30/360 rule.

Answer 1

Face value	$10,000
Interset Rate	5%
Interest Amount	125.00
Payment	Quarterly Payments
Maturity	5 Years
YTM	6%
YTM(Quarterly)	1.5%
Market Price	I * PVAF 1.5%,20 + RV*PVF1.5%,20
PVAF	(1-((1+0.015)^-20))/0.015
	17.1686
PVF	(1+0.015)^-20
	0.7425
Market Price	9571.075
After 8 th peyment i.e,After 2 years
Market price	I*PVAF1.5%,12+RV*PVF1.5%,12
PVAF	(1-((1+0.015)^-12))/0.015
	10.9075
PVF	(1+0.015)^-12
	0.8364
Market Price(After 2 Years)	9727.31
Clean Price	9727.31
Dirty Price After One month of 8th Payment
Dirty Price	Clean Price + Interest Accrued
Dirty Price	9727.31+ One month Interest Accrued
One month Interest Accrued	41.67
Dirty Price	9727.31+41.67
Dirty Price	9768.98