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Exam Series 7 topic 1 question 233 discussion

Actual exam question from FINRA's Series 7
Question #: 233
Topic #: 1
[All Series 7 Questions]

Bubba Corporation issued bonds that pay interest on January 15 and July 15 each year until maturity. An investor purchasing these bonds on Monday, April 12, must pay the contract price plus accrued interest for:

  • A. 87 days
  • B. 89 days
  • C. 93 days
  • D. 90 days
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Suggested Answer: D
90 days. Interest accrues from the coupon date to the settlement date. A regular way purchase on April 12 will settle on April 15. corporate bonds are figures on 30-day months, regardless of the actual number of days in the month. The year is considered 360 days. Therefore, interest is calculated for 16 days in
January plus 30 each for February and March plus 14 for April.

Comments

ck69420
1 month, 3 weeks ago
From my stc book: n. For corporate securities (stocks and bonds) and municipal securities (covered under MSRB Rule G-15), the settlement for regular-way transactions is two business days after the trade date (i.e., T + 2)
upvoted 1 times
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beccalyn
6 months, 1 week ago
Isn't settlement on corps T2?
upvoted 2 times
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