Page 51 - FINAL CFA SLIDES DECEMBER 2018 DAY 14

LOS 52.d: Describe and calculate the flat price, Session Unit 14:
accrued interest, and the full price of a bond., p.41 52. Introduction To Fixed Income Valuation

Example: Calculating the full price of a bond: A 5% bond makes coupon payments on June 15 and December 15 and
is trading with a YTM of 4%. The bond is purchased and will settle on August 21 when there will be four coupons
remaining until maturity. Calculate the full price of the bond using actual days.

tanties

The accrued interest:

Flat price = clean price,

Full price = dirty price.

Note that the flat price is not the
PV of the bond on its last coupon

payment date, 1,017.31 < 1,019.04.