Home
Back
Clean Price Formula:
| From: | To: |
The Clean Price of a bond refers to the price an investor pays to buy the bond without considering any accrued interest. It represents the bond's value excluding interest that has accumulated since the last coupon payment.
The calculator uses the clean price formula:
Where:
Explanation: The formula subtracts the accrued interest from the dirty price to determine the actual bond price excluding accumulated interest.
Details: Calculating clean price is essential for bond valuation, trading, and investment analysis. It helps investors compare bond prices accurately and understand the true cost of bond investments.
Tips: Enter the dirty price and accrued interest in dollars. Both values must be non-negative numbers. The calculator will compute the clean price by subtracting accrued interest from the dirty price.
Q1: What is the difference between clean price and dirty price?
A: Clean price excludes accrued interest while dirty price includes it. Clean price represents the bond's principal value, while dirty price represents the total amount payable.
Q2: When is clean price used?
A: Clean price is typically used for bond pricing comparisons and quoted in financial markets, while dirty price is used for actual settlement amounts.
Q3: How is accrued interest calculated?
A: Accrued interest is calculated based on the coupon rate, days since last payment, and day count convention (e.g., 30/360 or actual/365).
Q4: Can clean price be negative?
A: No, clean price should not be negative as it represents the bond's principal value. However, in rare market conditions, bond prices can theoretically approach zero but not become negative.
Q5: Why is clean price important for bond investors?
A: Clean price allows investors to compare bond prices without the distortion of accrued interest, making it easier to evaluate bond values and make informed investment decisions.