- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 44. Introduction to Fixed-Income Valuation
- Subject 3. Flat Price, Accrued Interest, and the Full Price

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**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

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**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 |