Dirty Price

The dirty price of a bond is the price of the bond including accrued interest. The clean price is the price of the bond excluding accrued interest. The difference between the dirty price and the clean price is the accrued interest.

Accrued interest is the interest that has accumulated on a bond since the last coupon payment date. The coupon payment date is the date on which the bondholder receives a coupon payment. The coupon payment is a fixed amount of money that is paid to the bondholder on a regular basis. The frequency of the coupon payments depends on the type of bond. For example, a bond that pays coupons semi-annually will have two coupon payments per year.

The dirty price of a bond is calculated by adding the accrued interest to the clean price. The clean price is calculated by dividing the face value of the bond by the yield to maturity. The yield to maturity is the interest rate that a bondholder would earn if they held the bond until maturity.

The dirty price of a bond is used to calculate the bond's yield to maturity. The yield to maturity is calculated by dividing the dirty price by the face value of the bond and then subtracting the accrued interest.

The dirty price of a bond is also used to calculate the bond's current yield. The current yield is calculated by dividing the coupon payment by the dirty price.

The dirty price of a bond is an important concept for investors to understand. The dirty price is used to calculate the bond's yield to maturity and current yield. The dirty price is also used to compare bonds with different maturities and coupon rates.