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10-22I

Expert-verified
Found in: Page 330

### Essentials Of Investments

Book edition 9th
Author(s) Zvi Bodie, Alex Kane, Alan Marcus, Alan J. Marcus
Pages 748 pages
ISBN 9780078034695

# A bond with a coupon rate of 7% makes semi-annual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on January 30 at 100:02. What is the invoice price of the bond? The coupon period has 182 days.

## Calculation of the accrued interest for 15 days

Accrued interest for last 15 days = Annual coupon payment / 2 x Day’s since last coupon payment / Day’s separating coupon payment

= $35 x (15/182) =$2.8846

## Calculation of the invoice price

The invoice price = the reported price + accrued interest

= $10001.25 +$ 2.8846

= \$ 1004.13