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Clean Price

The quoted bond price excluding accrued interest.

Clean price is how bonds are quoted in most markets — it's the price stripped of accrued interest. This convention exists because a bond's full value oscillates between coupon payments (rising as interest accrues, then dropping when a coupon is paid). By quoting clean prices, you can compare bonds fairly without worrying about where each bond is in its coupon cycle. When you actually buy a bond, you pay the dirty price (clean price + accrued interest), but the clean price is what you see on your screen and what traders negotiate. Think of clean price as the bond's 'core value' before adding the interest that's built up since the last payment.

Formula
Pclean=PdirtyAccrued InterestP_{\text{clean}} = P_{\text{dirty}} - \text{Accrued Interest}
Variables
P_{dirty}Dirty/full price (actual settlement amount per 100)
P_{clean}Clean/quoted price (for comparability)
AIAccrued interest
Assumptions
  • Clean prices are quoted for comparability across bonds
  • Dirty price is the actual amount paid at settlement
  • Settlement amount = (Dirty / 100) × Notional