Bonds

Bonds - The price of a bond (part 1)

Level: Beginner / Length: 7 minutes

This module is part one of two on the topic of the price of bonds. The course is the beginning of our exploration of bond trading in the secondary market.


The bond price you see on a trading screen is a percentage price. Why is that?

What exactly is the ‘accrued coupon’ on a bond?


This ‘secondary market’ is the place in which all bonds trade once the initial primary market issue has taken place. It is in this secondary market that the price of a bond is important for bond investors. We need to understand the quoted price for a bond known as the clean price. And in this first topic we begin by showing you how to calculate the cash equivalent of the clean price of the bond. We’ll also explain why the investor pays the ‘dirty price’ for a bond rather than just the clean traded price. 

We’ll look at:

  • The price of a bond is a percentage. What does this mean?
  • Trading the ‘clean’ price of a bond
  • Coupon accruals
  • The invoice or ‘dirty price’ of a bond

IMPORTANT INFORMATION

The materials published on all Saxo Group websites should not be considered as financial, investment, tax, trading or other advice, or recommendation to invest or disinvest in a particular manner. Saxo Markets assumes no liability for any losses resulting from trading in accordance with a perceived recommendation or reliance on Saxo material. Past performance is not indicative of future results.

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.