A dirty price is a bond pricing quote, which refers to the cost of a bond that includes accrued interest based on the coupon rate. Bond price quotes between coupon payment dates reflect the accrued interest up to the day of the quote. In short, a dirty bond price includes accrued interest while a clean price

How do you calculate the price of a bond?

The present value of a bond is calculated by discounting the bond’s future cash payments by the current market interest rate. In other words, the present value of a bond is the total of: The present value of the semiannual interest payments, PLUS. The present value of the principal payment on the date the bond matures.

What is the relationship between interest rates and bond prices?

Bonds have an inverse relationship to interest rates. When the cost of borrowing money rises (when interest rates rise), bond prices usually fall, and vice-versa.