PFIN 5th Edition by Randall Billingsley,Lawrence Gitman,Michael Joehnk

Exercise 1

Clean and dirty bond prices. You have decided to sell a 5 percent semiannual coupon bond two months after the last coupon payment. The bond is currently selling for $951.25. Answer the following questions about the bond:
a. What is the clean price of the bond?
b. What is the dirty (full) price of the bond?
c. Explain how the clean and dirty prices of the bond are relevant to the buyer of the bond.