Question

The bond prices that you see quoted in the financial pages are not the prices you...

The bond prices that you see quoted in the financial pages are not the prices you pay for the bond. It is because the quoted price does not include the interest that accrues between coupon payments dates. If a bond is purchased, the buyer must pay the seller for accrued interest. Therefore, invoice price of a bond includes quoted price and accrued interest. Suppose that coupon rate is 7%. Coupons are paid semiannually. 157 days have passed since the last coupon payment and there are 182 days in the semiannual coupon payments. What is invoice price or the total price you pay to the seller if you would like to this bond at a quoted (market) price of $990?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Accrued interest..... a) is quoted in the bond price in the financial press and must be...
Accrued interest..... a) is quoted in the bond price in the financial press and must be paid by the buyer of the bond to the seller of the bond. b) is NOT quoted in the bond price in the financial press and must be paid by the buyer of the bond to the seller of the bond. c) is quoted in the bond price in the financial press and must be paid by the buyer of the bond to the...
A.Bond Prices A $1,000 par bond that pays interest semiannually has a quoted coupon rate of...
A.Bond Prices A $1,000 par bond that pays interest semiannually has a quoted coupon rate of 7%, a promised yield to maturity of 7.7% and exactly 6 years to maturity. What is the bond's current value? B.Bond Prices A $1,000 par bond that pays interest semiannually has a quoted coupon rate of 5%, a promised yield to maturity of 5.7% and exactly 11 years to maturity. The present value of the coupon stream represents ______ of the total bond's value....
Assume the bond’s quoted (“clean”) price is $1,044.56, the bond has the coupon rate of 8.1%...
Assume the bond’s quoted (“clean”) price is $1,044.56, the bond has the coupon rate of 8.1% and that the coupons are paid semiannually. Further assume that the bond has the face value of $1,000. What is the bond’s invoice (“dirty”) price if the last coupon payment took place four months ago?
When you buy a bond, the date of purchase (the settlement date) is often between two...
When you buy a bond, the date of purchase (the settlement date) is often between two coupon payment dates. In this situation, the price you pay (the invoice price) is the sum of the flat price and the accrued interest. Invoice price = Flat price + Accrued Interest For a semi-annual payment coupon bond, the accrued interest In this exercise, you compute the invoice price of a $1000 par value, 5% semi-annual payment coupon bond maturing on 30th June 2025...
Suppose that you purchase a bond with a quoted price of $991.52 on January 15. The...
Suppose that you purchase a bond with a quoted price of $991.52 on January 15. The bond has a coupon rate of 6.840% and pays interest on May 15 and November 15 of each year. The exact number of days between November 15 and January 15 is 61, and the exact number of days between November 15 and May 15 is 181. What is the invoice price of the bond? (Round your answer to 2 decimal places.) Invoice price            $
Essentials of Investments- Bodie, Kane and Marcus. 1. A government bond pays a semiannual coupon at...
Essentials of Investments- Bodie, Kane and Marcus. 1. A government bond pays a semiannual coupon at 8% and makes payments on January 7 and July 7 of each year. The WSJ reports an ask price for this bond on January 22 of $ 1003,125. What is the invoice price (invoice Price) of the bond if the period between coupon and coupon is 182 days?
A Treasury note with a 4% coupon, semiannual payments, and par value of $1,000 yields 4.5%...
A Treasury note with a 4% coupon, semiannual payments, and par value of $1,000 yields 4.5% and has four payments left to maturity. There are 129 days until the next coupon payment and 182 days between coupons. What is the clean price of the note (i.e., price net of accrued interest)?
Suppose that a bond is purchased between coupon periods. The days between the settlement date and...
Suppose that a bond is purchased between coupon periods. The days between the settlement date and the next coupon period are 80. There are 182 days in the coupon period. Suppose that the bond purchased has a coupon rate of 7% and there are 8 semiannual coupon payments remaining. The par value of the bond is $100. a. What is the full price for this bond if a 6.2% annual discount rate is used? b. What is the accrued interest...
A $1,000 par value bond has 7.5% semiannual coupons and matures on July 1, 2017 at...
A $1,000 par value bond has 7.5% semiannual coupons and matures on July 1, 2017 at $1050. Find the actual feeling price of this bond on November 15, 2013 and the price that would be quoted in a financial newspaper on the same date, based on a nominal annual yield rate of 5.8% compounded semiannually. Use the actual number of days to compare the accrued interest.
A Treasury bond is quoted with a price of 96-14. It has a coupon of 2.25%...
A Treasury bond is quoted with a price of 96-14. It has a coupon of 2.25% and a final maturity of 4/15/45 (and coupon payment dates of 4/15 and 10/15). The bond trades at that price on 12/7/16 on a regular way basis. The face amount of the transaction is $10 million. What is the dollar price for $10 million (excluding accrued interest) based on a price of 96-14? AND What is the accrued interest?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT