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flat price and full price

Not too clear on the readings…

When a person buys a bond between the coupon dates, do they pay the full price or do they pay the flat price?

Who gets the accured interest? The buyer or the seller?  If a person pays the flat price, does the seller keep the accrued interest? if the person pays the full price, I assume the buyer keeps the accrued interest?

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125mph wrote:
Not too clear on the readings…

When a person buys a bond between the coupon dates, do they pay the full price or do they pay the flat price?

The full price.

125mph wrote:
Who gets the accured interest? The buyer or the seller?

The seller.

125mph wrote:
If a person pays the flat price, does the seller keep the accrued interest? if the person pays the full price, I assume the buyer keeps the accrued interest?

The buyer pays the full price (not the flat price), so the seller receives (and keeps) the accrued interest.

Simplify the complicated side; don't complify the simplicated side.

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