# What Is the Clean Price?

The clean price is the price of a bond that excludes the interest that has accrued since the last coupon payment. This is in contrast to the dirty price, which includes the accrued interest. The clean price is also sometimes referred to as the "flat price."

What is a clean up bond? A clean-up bond is a type of corporate bond that is issued by a company in order to pay off any outstanding debt that it may have. This type of bond is typically used by companies that have a large amount of debt and are looking to pay it off in one lump sum. What is the face value of a bond called? A bond's face value is the amount of money that the bond issuer agrees to pay the bondholder when the bond matures. The face value is also known as the par value or principal amount. Is dirty price always higher than clean price? No, dirty price is not always higher than clean price. The dirty price includes the Accrued Interest, which is the interest that has accumulated since the last coupon payment up to, but not including, the settlement date. The clean price excludes the Accrued Interest. Is invoice price same as dirty price? No, the invoice price is not the same as the dirty price. The dirty price includes the accrued interest, while the invoice price does not.

How do you calculate the clean price of a bond? The clean price of a bond is the price of the bond excluding accrued interest. To calculate the clean price of a bond, you first need to calculate the bond's yield to maturity. The yield to maturity is the rate of return you would earn if you held the bond until it matured and reinvested all of your interest payments at the same rate. Once you have calculated the yield to maturity, you can use this formula:

Clean Price = Face Value / (1 + Yield to Maturity) ^ Number of Years to Maturity

For example, let's say you have a \$1,000 bond with a yield to maturity of 5%. The bond has 10 years remaining until it matures. The clean price of the bond would be:

Clean Price = \$1,000 / (1 + 0.05) ^ 10

Clean Price = \$1,000 / 1.628

Clean Price = \$613.93