A six year, $ 1000 facevalue bond issued by Taylor Tools pays interest semiannually on February 1 and August 1. Assume today is October 1. What will be the difference, if any, between this bonds clean and dirty prices today?

The difference between this bonds clean and dirty prices today is two months interest

Explanation:

When we talk about the clean price, we are referring to the difference between the dirty price and the accrued interest.

In this question, two months has passed from the last coupon date( the date in which the interest is paid). Thus, for the given question the difference between the clean price and dirty price is “two month’s interest”( August to October)

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Explanation: