Question: solve in 60 mins i will give thumb up Problem 6. Suppose that a bond is purchased between coupon periods. The number of days between

 solve in 60 mins i will give thumb up Problem 6.

solve in 60 mins i will give thumb up

Problem 6. Suppose that a bond is purchased between coupon periods. The number of days between the settlement date and the next coupon period is 115 . There are 183 days in the coupon period. Suppose that the bond purchased has a coupon rate 7.4% and there are 10 semi-annual coupon payments remaining. a) What is the dirty (full) price for this bond if a 5.6% discount rate is used? b) What is the accrued interest for this bond? c) What is the clean (flat) price? d) Redo the same calculations if the number of days between the settlement date and the next coupon period is 60, 90, 180. e) Give a brief comment of your result and explain why bonds are quoted at their clean price

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