Calculating the full price of a bond

[archived_user]

When calculating the full price of a bond and the question does not specify the actual day convention or 30/360 convention, how will I know which one to use. MM states that if its a corporate bond to use the 30/360 convention. Also, in his video he mentions leap years and many other questions using the actual day convention incorporate months that have 31 days. This is embarrassing, but I do not know the specific months that have more or less than 30 days (other than February which has 28). Am I screwed for these types of questions; how do i proceed?

 

[archived_user]

Use the knuckle trick for 30/31 day months!

 

[archived_user]

Tell me more

 

[archived_user]

breadmaker wrote:
Use the knuckle trick for 30/31 day months!

What I am saying is that I do not know which months have 30/31 days off the top of my head. So how can I expect to parry questions when I dont know what the numerator of t/T will be?

 

[archived_user]

Of course, February is the exception to the rule.

 

[archived_user]

They’re not going to give you incorrect answer choices that have the wrong number of days for a given month.
That’s not the point of the exam.

 

[archived_user]

breadmaker wrote:
Of course, February is the exception to the rule.

Wow, truly amazing. How did I make it to this age without this.

 

[archived_user]

S2000magician wrote:
They’re not going to give you incorrect answer choices that have the wrong number of days for a given month.
That’s not the point of the exam.

I was hoping you would show up. So if this is the case, should I default to the 30/360?

 

[archived_user]

Lloydas1 wrote:

S2000magician wrote: They’re not going to give you incorrect answer choices that have the wrong number of days for a given month.
That’s not the point of the exam.

I was hoping you would show up. So if this is the case, should I default to the 30/360?

I would.
It will get you close enough to the correct answer.

 

[archived_user]

There is also a BOND worksheet that lets you do either 30/360 or exact days for bond pricing!!!

 

[archived_user]

S2000magician wrote:

Lloydas1 wrote:

S2000magician wrote: They’re not going to give you incorrect answer choices that have the wrong number of days for a given month.
That’s not the point of the exam.

I was hoping you would show up. So if this is the case, should I default to the 30/360?

I would.
It will get you close enough to the correct answer.

+1