The price of a bond excluding accrued interest is called:

• A. Dirty price
• B. Mid market price
• C. Clean price
• D. Settlement price

Answer: (C)

Bond prices are quoted as the clean price, which is the value of the bond excluding accrued interest. Accrued interest builds up from the last coupon payment to the settlement date and is paid separately, so the total amount paid to buy the bond is the dirty price, equal to clean price plus accrued interest. This separation helps compare bonds on value alone, since accrued interest depends on where we are in the coupon cycle. For example, if half a six‑month coupon period has elapsed, the accrued interest is about half of that period’s coupon, and you would add it to the clean price to get the dirty price. Mid-market or settlement price terms exist in other contexts but don’t define the standard bond quote like clean price does.