Clean and dirty bond prices You have decided to sell a 4 percent semiannual coupon bond two months after the last coupon payment. The bond is currently selling for $966.25. Answer the following questions about the bond. Assume that the par value of the bond is $1,000. Round your answer to nearest cent. What is the clean price of the bond? $ What is the dirty (full) price of the bond? $ Explain how the clean and dirty prices of the bond are relevant to the buyer of the bond.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Clean and dirty
You have decided to sell a 4 percent semiannual coupon bond two months after the last coupon payment. The bond is currently selling for $966.25. Answer the following questions about the bond. Assume that the par value of the bond is $1,000. Round your answer to nearest cent.
- What is the clean price of the bond?
$ - What is the dirty (full) price of the bond?
$ - Explain how the clean and dirty prices of the bond are relevant to the buyer of the bond.
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