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**CFA Practice Question**

Assume that a bond has a market value of $1,097.71. This value is the full or "dirty" price. It is an investment grade security with a coupon of 8%, paid semi-annually. Currently, you are 100 days into this bond's 182-day coupon period. Calculate the clean price of this bond.

A. $1,051.42

B. $1,075.73

C. $1,080

**Explanation:**The clean price of the bond is simply the total or dirty price less AI (accrued interest). Since you are currently 100 days into a 182-day coupon period, 54.9% of the $40 interest payment has accrued and is owed to the seller. Thus .549 x 40 = $21.98 is deducted from the full price to determine the actual bond value to the buyer. The clean price = $1,097.71 - $21.98 = $1,075.73.

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**User Contributed Comments**
6

User |
Comment |
---|---|

ontrack |
Guys, please read carefully, i missed the semi annual coupon and rest assured they had option A to trap me! |

psos |
pitty |

mpapwa22 |
Same here ontruck....but i no da trick now.... |

dipu617 |
I got trapped too and chose "A" :-( |

harrybay |
SEMI-ANNUAL COUPON |

pigletin |
PV * (1+r)^t/T = Price Full |