It is May 1 . The quoted price of a bond with an Actual/Actual (in period) day count and 12% per annum coupon (paid semiannually) in the United States is 105 . It has a face value of 100 and pays coupons on April 1 and October 1
What is the cash price?
A. 106.00
B. 106.02
C. 105.98
D. 106.04
C
The cash price is the quoted price plus accrued interest. There are 30 actual days between April 1 and May 1 and 183 actual days between April 1 and October 1 . In this case the quoted price is 105 and the accrued interest is 0.06×100×30/183=0.98 . The answer is therefore 105.98 .
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