Baran

The correct answer is C

The clean price is the bond price without the accrued interest so it is equal to the quoted price.

Baran

4、 5% coupon bond with semi-annual coupon payments on a coupon payment date when the coupon has not been paid yet and the bond has a $1,000 par value. What is the accrued interest of the bond and what is the bond's full price?

Accrued Interest  Full Price
A)$25                            $1,000
B)$50                            $1,050
C)$25                            $1,025
D)$50                            $1,000

Baran

The correct answer is C 

 Accrued interest is found by simply dividing the coupon rate by two and then multiplying the result by $1,000. The full price or dirty price of the bond is the price of the bond plus accrued interest, if any.

Baran

The correct answer is D

The flat price is the bond price without the accrued interest, so it is equal to the quoted price of 105 7/32 = $1,052.19.

Baran

2、Which of the following statements concerning coupon rate structures is least accurate?

A) Zero-coupon bonds have only one cash inflow at maturity.
 
B) Accrual bonds have only one cash inflow at maturity.
 
C) Accrual bonds, like zero-coupon bonds, always sell at a discount to face value.
 
D) Step-up notes have coupon rates that increase over time at a pre-specified rate.