DIRTY PRICE-A dirty price includes accrued interest along with a bond’s coupon payment.
If a bond quotes between coupon payment dates, the price cited includes accrued interest upto the day of quote. Dirty quotes are standard in europe.
For eg- Let’s say Samsung issued a bond with 1000 face value while $960 is the published price. The bond pays coupon rate of 4% annually and the payments are semi-annual. As a result, investors would receive $20 every six months for holding the bond.
If someone wants to buy the bond then he would receive the quote from the broker which will include 960$+accrued interest till the date of quote.
CLEAN PRICE-The clean price is the price of a coupon bond which donot include accrued interest payments.
The clean price is typically the quoted price on financial new sites. Clean quote are typical in US.
For Eg-Let’s take same example Samsung issued a bond with 1000 face value while $960 is the published price. The bond pays coupon rate of 4% annually and the payments are semi-annual. As a result, investors would receive $20 every six months for holding the bond.
If someone wants to purchase it then on the date of purchase,if it is trading at $1005, then the purchaser will buy it at $1005 only, No accrued interest will be included.
Site Title 