Explanation:
The dirty price is equal to the agreed upon, or quoted price, plus interest accrued from the last coupon date. In this case, the quoted price is $1,000 \times 102.25/1001,000 \times 1.0225 = 1,022.5$. Thus, the dirty price =
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Q.91 A risk manager is considering buying a $1,000 face value, semi-annual coupon bond with a quoted price of 102.25. The interest accrued since the last coupon is $2.50 per $100 face value. If the manager pays the dirty price, how much will the seller receive at the settlement date?
A
$997.5
B
$1,022.5
C
$1,025
D
$1,047.5
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