What is Dirty Price ?
The dirty price of a bond, also known as the full price or invoice price, represents the actual cost to purchase the bond in the market. It includes both the clean price of the bond, which is the quoted price excluding any accrued interest, and the accrued interest that has accumulated since the last coupon payment. Accrued interest is the portion of the next coupon payment that has been earned by the bondholder but not yet paid. The dirty price is important for investors because it reflects the total amount they need to pay to acquire the bond, taking into account both its current market value and the interest that has accrued since the last coupon payment.
How to Calculate Dirty Price?
Dirty Price calculator uses Dirty Price = Clean Price+Accrued Interest to calculate the Dirty Price, The Dirty Price of a bond refers to its full price, which includes both the clean price and the accrued interest since the last coupon payment. Dirty Price is denoted by P_{dirty} symbol.
How to calculate Dirty Price using this online calculator? To use this online calculator for Dirty Price, enter Clean Price (P_{clean}) & Accrued Interest (AI) and hit the calculate button. Here is how the Dirty Price calculation can be explained with given input values -> 65.5 = 57.5+5.5.