Monday, April 6, 2015

PRICE is clean or dirty;YIELD is always "dirty"

Traders quote clean price. However, Full price, Dirty price, or Invoice price is the price used for settlement.

YTM is neither clean or dirty. YTM is always "converted" from dirty price. My lecturer said --

There is only one yield to maturity.  It is neither of a "clean" nor "invoice" type.  The formula relating yield to maturity to bond price refers to the invoice price, not the clean price. 

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