Fixed Income Sec.- Pull to Par Concept - Clean / Full Price

vandhana.gopalakrishnan
Posts: 5
Joined: Tue Jul 17, 2012 12:31 pm

Fixed Income Sec.- Pull to Par Concept - Clean / Full Price

Postby vandhana.gopalakrishnan » Fri Jul 27, 2012 9:59 pm

When we say the bond prices converge to par value as maturity approaches, which price are we referring to here, Clean Price or Full Price ?

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content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: Fixed Income Sec.- Pull to Par Concept - Clean / Full Pr

Postby content.pristine » Sat Jul 28, 2012 8:21 pm

Hi Vandhana,

We are always referring to the Clean price in pull to par or any other Fixed Income concept. Dirty Price is only used when you are buying or selling a bond, if you want to know the actual amount paid, you use dirty price.

When you use your TVM function on your calculator, or use the price or PV function in excel, you are always calculating the clean price of a bond..

8-)


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