Explanation:
Both statements are correct. The cash price of a Treasury bond is also the dirty price of the same Treasury bond, and the quoted price of a Treasury bond is also the clean price of the same bond. The dirty price (cash price) includes the accrued interest, while the clean price (quoted price) excludes the accrued interest.
Q.694 Matias Agrov runs an independent investment advisory and investment education services business in Moscow. His investment advisory services are focused on fixed-income investments and interest rate futures, which he renders to high net worth individuals and small corporations. He also conducts weekly free webinars to educate beginner investors on interest rates futures and derivatives. In one of his weekly webinars, he made the following statements in order to get rid of any confusion about prices of Treasury bond derivatives:
I. The cash price of a Treasury bond is also the dirty price of the same bond
II. The quoted price of a Treasury bond is also the clean price of the same bond
Which of his statements is/are correct?
A
Only statement I is correct.
B
Only statement II is correct.
C
Both statements are correct.
D
None of the statements is correct.
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