The dirty price of a bond equals the quoted price plus accrued interest. If an issuer has defaulted, the bond trades without interest and is said to trade flat. When a security trades ex-coupon, the buyer pays the clean price, which is the quoted price without accrued interest. The dirty price of a bond is greater than the clean price by the amount of the accrued interest. (If the bond trades on a coupon date, the dirty price will equal the clean price.) |
