Problem 6-20 Accrued Interest [LO 2] You purchase a bond with an invoice price o
ID: 2641012 • Letter: P
Question
Problem 6-20 Accrued Interest [LO 2]
You purchase a bond with an invoice price of $1,120. The bond has a coupon rate of 10.4 percent, semiannual coupons, and there are five months to the next coupon date.
What is the clean price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Problem 6-21 Accrued Interest [LO 2]
If the next coupon payment is due in five months, what is the invoice price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
You purchase a bond with an invoice price of $1,120. The bond has a coupon rate of 10.4 percent, semiannual coupons, and there are five months to the next coupon date.
Explanation / Answer
Calculation of clean Price of the bond Present value of interest and Principal repayments Interest 58.24 Principal 1120 Total 1178.24 PVF (10.4%, 5 months) 0.95057 Clean Price of the bond 1120