CFA Practice Question

There are 490 practice questions for this study session.

CFA Practice Question

Assume that three months have elapsed since the last coupon payment date. The cum-coupon price of $250,000 par value of a five-year, semi-annual pay, 6% coupon bonds is $225,900. What is the full price?
A. $228,490
B. $229,650
C. $232,657
Explanation: The clean price is $225,900. The accrued interest is (3/6) (1/2) (6%) $250,000 = $3,750. The full price = $225,900 + $3,750 = $229,650

User Contributed Comments 6

User Comment
CodyR Also known as the dirty price.
Jpsmith835 Why is it a 1/2 x 1/2 x 250,000?
shumwaya 3 out of 6 months of the coupon payment, and semi annual payments so 1/2 of a year
sarahly hey Guys, but still doesn't understanf why 3 out of 6 months
merc10112 @sarahly 3 months have gone by since the last coupon payment and coupon payments are made on a semi-annual basis (every 6 months).

So you need to account for that accrued interest in those 3 months since the last coupon payment. So (3/6)
Ngana would we have used the total time elapsed since inception if given instead of the 3/6
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