Flat Price (Clean Price)

Flat price (synonymous with clean price) is the bond's quoted market price excluding accrued interest. If a bond is quoted at 98.50, that's the flat price. To settle the trade, you add accrued interest to get the dirty price (invoice price). Flat pricing simplifies comparisons: you can compare two bonds' quoted prices directly without worrying about where they are in their coupon cycles. Think of it as the sticker price on a car: it's the advertised price, but the out-the-door price (dirty price) includes taxes and fees (accrued interest). U.S. Treasuries and most corporate bonds are quoted flat. Exception: bonds in default or distressed situations may trade 'flat' in a different sense — without any expectation of receiving accrued interest.