To calculate the accrued interest of a bond, we need to determine the portion of the coupon payment that has accrued since the last coupon payment date. Here's how we can calculate it step by step:

1. **Determine the coupon payment:** The bond has a 5% coupon rate, which means it pays 5% of its face value as a coupon payment annually. Since the face value is not provided, we'll assume it to be $100 for simplicity. Therefore, the annual coupon payment is $100 * 5% = $5. Since the bond pays coupons semi-annually (twice a year), each coupon payment is $5 / 2 = $2.5.

2. **Calculate the time since the last coupon payment:** The bond has 20 months to maturity. Since the bond pays coupons semi-annually, we need to determine how many months have passed since the last coupon payment. This would be 20 months modulo 6 (the number of months in a semi-annual period), which is 2 months.

3. **Calculate the accrued interest:** The accrued interest is the portion of the coupon payment that has accrued since the last coupon payment date. Since 2 months have passed in a 6-month coupon period, the accrued interest is $2.5 * (2 / 6) = $0.833.

Therefore, the accrued interest of this bond is $0.833, which matches option B.

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To calculate the accrued interest of a bond, we need to determine the portion of the coupon payment that has accrued since the last coupon payment date. Here's how we can calculate it step by step:

1. **Determine the coupon payment:** The bond has a 5% coupon rate, which means it pays 5% of its face value as a coupon payment annually. Since the face value is not provided, we'll assume it to be $100 for simplicity. Therefore, the annual coupon payment is $100 * 5% = $5. Since the bond pays coupons semi-annually (twice a year), each coupon payment is $5 / 2 = $2.5.

2. **Calculate the time since the last coupon payment:** The bond has 20 months to maturity. Since the bond pays coupons semi-annually, we need to determine how many months have passed since the last coupon payment. This would be 20 months modulo 6 (the number of months in a semi-annual period), which is 2 months.

3. **Calculate the accrued interest:** The accrued interest is the portion of the coupon payment that has accrued since the last coupon payment date. Since 2 months have passed in a 6-month coupon period, the accrued interest is $2.5 * (2 / 6) = $0.833.

Therefore, the accrued interest of this bond is $0.833, which matches option B.

Knowee AI · Accepted Answer

To calculate the accrued interest of a bond, we need to determine the portion of the coupon payment that has accrued since the last coupon payment date. Here's how we can calculate it step by step:

1. **Determine the coupon payment:** The bond has a 5% coupon rate, which means it pays 5% of its face value as a coupon payment annually. Since the face value is not provided, we'll assume it to be $100 for simplicity. Therefore, the annual coupon payment is $100 * 5% = $5. Since the bond pays coupons semi-annually (twice a year), each coupon payment is $5 / 2 = $2.5.

2. **Calculate the time since the last coupon payment:** The bond has 20 months to maturity. Since the bond pays coupons semi-annually, we need to determine how many months have passed since the last coupon payment. This would be 20 months modulo 6 (the number of months in a semi-annual period), which is 2 months.

3. **Calculate the accrued interest:** The accrued interest is the portion of the coupon payment that has accrued since the last coupon payment date. Since 2 months have passed in a 6-month coupon period, the accrued interest is $2.5 * (2 / 6) = $0.833.

Therefore, the accrued interest of this bond is $0.833, which matches option B.

A 5% coupon-paying bond has a yield to maturity 7% p.a and 20 months to maturity. What is the accrued interest of this bond? 3 A. 1.667 B. 0.833 C. 2.5×(1+7%/2)^2/3 D. 2.5×(1+7%/2)^1/3

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