FRM一级易错题精选:Coupon Bond

Peter Stone is considering buying a$100 face value,semi-annual coupon bond with a quoted price of 105.19.His colleague points out that the bond is
 
trading ex-coupon.Which of the following choices best represents what Stone will pay for the bond?
 
A.$105.19 plus accrued interest.
 
B.$105.19.
 
C.$105.19 minus accrued interest.
 
D.$105.19 minus the coupon payment.
 
FRM一级考试
 
Answer:B
 
Since the bond is trading ex-coupon,the buyer will pay the seller the clean price,or the price without accrued interest.So,Stone will pay the quoted price.The choice$105.19 plus accrued interest represents the dirty price(also known as full price).This bond would be said to trade cum-coupon.


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