Clean Bond Quotes and Dirty Settlement Prices

Summary

The note explains the distinction between clean and dirty bond prices. Bonds are typically quoted at a clean price, which excludes accrued interest and makes quoted prices easier to compare. At trade settlement, the buyer also pays the seller the interest accrued since the relevant coupon date; adding that amount to the clean price gives the dirty price, the total payment for the bond.

This is a brief market convention rather than a detailed pricing guide. It does not specify settlement rules, day-count conventions, coupon schedules, or exceptions that may apply to particular instruments or markets. The key practical point is to distinguish the quoted price from the settlement amount: accrued interest bridges the difference. The note offers no numerical example, so applying the calculation requires the bond’s terms and the applicable market conventions.

Key ideas

• Bond prices are commonly quoted clean, excluding accrued interest.
• At settlement, the buyer pays accrued interest to the seller in addition to the clean price.
• The clean price plus accrued interest is the dirty price paid at settlement.
• The calculation depends on bond terms and applicable market conventions.

Tags

# Bonds are traded and settled at clean price or Dirty price?


# Bonds are traded and settled at clean price or Dirty price?












Are Bonds are traded and settled at clean price or Dirty price ?

## Answer by D Stanley (score 0)

https://quant.stackexchange.com/a/50395

They are typically quoted as a "clean" price for comparability. When they trade (and settle) then the buyer must pay any accrued interest to the seller, which makes up the "dirty" price.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.