Why does the bond quote differ from the settlement amount?
excludes ; dirty settlement price combines both.
Why does settlement cost rise when the clean quote stays unchanged?
Hold clean quote at 98.50 per 100 with 5% semiannual coupons. Move the settlement date.
Accrued interest rises, not the clean quote. This is why markets quote them separately.
Dirty quote × face 10,000 / 100 = settlement amount 9,974.31
What did you just see?
Even at a constant , rises as interest accrues and resets on coupon dates. Separating accrual makes market price changes easier to observe.
Dates and day basis
Uses the Financial Calculator BOND date engine with annual or semiannual coupons. Actual divides elapsed actual days by actual coupon-period days. The calculator's 360 basis is not every market's standard 30/360. Contract conventions can differ.
Another example
- Previous coupon is 2025-12-31; next is 2026-06-30.
- Multiply the 2.50 coupon per 100 by 90 / 181.
- Add clean quote and multiply by face / 100 for settlement amount.
Show formal definition and formula
Clean price excludes accrued interest. Dirty price adds interest accrued from the previous coupon date to settlement.
Accrued = (100 × c/m) × elapsed days / coupon-period days; Dirty = Clean + Accrued; Amount = Dirty × Face/100Clean price excludes accrued interest. Dirty price adds interest accrued from the previous coupon date to settlement.
Common mistakes
98.50 is a quote per 100, not necessarily your payment. The schedule is regular and anchored to maturity; irregular stubs and ex-coupon trades are excluded.
Frequently asked questions
What is accrued interest on a coupon date?
Settlement on a coupon date begins a new period, so accrued interest is zero in this model.
You can now explore…
- Quotes versus settlement amounts
- How interest accrues through a coupon period
Term reference4 terms
Open a term when you need a reminder. Underlined words in the article work too.