Imagine a plain 10% 100 TL bond which pays its coupon in equal half-yearly instalments on 1 January and 1 July each year. Suppose for simplicity that a year is 360 days and a month is 30 days. Assume that the long-term interest rates are 10%. Its clean price will be 100 TL and this will also be the dirty or market price on 1 January and 1 July, when there is no accrued interest to take into account. Now let us assume additionally that the bond goes ‘ex dividend’ 15 days before the coupon payment date. If it is now February 1, please calculate the market price of the bond. Show transcribed image text Imagine a plain 10% 100 TL bond which pays its coupon in equal half-yearly instalments on 1 January and 1 July each year. Suppose for simplicity that a year is 360 days and a month is 30 days. Assume that the long-term interest rates are 10%. Its clean price will be 100 TL and this will also be the dirty or market price on 1 January and 1 July, when there is no accrued interest to take into account. Now let us assume additionally that the bond goes ‘ex dividend’ 15 days before the coupon payment date. If it is now February 1, please calculate the market price of the bond.
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