CLEAN PRICE Meaning and
Definition
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Clean price, also known as the flat price, refers to the quoted price of a financial instrument, such as a bond or a fixed-income security, which does not take into account any accrued interest or other embedded features. It represents the market value of the instrument without including any additional costs or expenses.
The clean price is typically quoted as a percentage of the instrument's face value, which is usually $100 or 100%. It reflects the present value of the instrument's future cash flows, specifically the principal and interest payments. This price does not account for any interest that has accrued since the last coupon payment, as the accrued interest is typically handled separately.
In the case of a bond, the clean price is the price an investor pays to purchase the bond, without factoring in any interest that has accumulated since the last coupon payment. On the other hand, the dirty price, or full price, includes the accrued interest and represents the total cost to the buyer, including any interest or coupon amounts due to the seller.
The clean price is used as a benchmark for bond valuation, as it provides an accurate representation of the market value of the instrument. It is also important for investors to calculate the clean price when buying or selling bonds, as it allows them to compare different bond offerings on an equal basis without the influence of accrued interest.
Common Misspellings for CLEAN PRICE
- xlean price
- vlean price
- flean price
- dlean price
- ckean price
- cpean price
- coean price
- clwan price
- clsan price
- cldan price
- clran price
- cl4an price
- cl3an price
- clezn price
- clesn price
- clewn price
- cleqn price
- cleab price
- cleam price
- cleaj price
Etymology of CLEAN PRICE
The etymology of the term "clean price" can be understood by analyzing the origins of the individual words.
1. Clean: The word "clean" comes from the Old English word "clæne", which means "free from dirt, stain, or impurities". It has its roots in the Proto-Germanic word "klainiz", meaning "clear" or "pure". Over time, "clean" has evolved in various languages and retained its meaning of cleanliness or purity.
2. Price: The word "price" is derived from the Old French word "pris", which originally referred to the value or worth of something. It can be traced back to the Late Latin word "pretium", meaning "value" or "reward".
