Question

**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?

Answer #1

Number of days : 22-7= 15 days

Accrued Interest : Par Value * coupon rate * n/ 360

= 1000 * .08 *15/182

= 6.59

Invoice Price = Flat price + accrued Interest

= 1003.125 + 6.59

= $ 1009.715

Essentials of Investments- Bodie, Kane and
Marcus.
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