Clean vs. Dirty Bond Prices: What Investors Need

Imagine you're buying a bond, which is like a loan.

Bonds pay interest regularly, but if you buy or sell a bond in between those payments, things get a little tricky.

The "clean price" is the bond's basic value, while the "dirty price" is what you actually pay, including the interest earned since the last payment.

This is important because it shows the actual cost of the bond.

Also, if interest rates change, the bond's price will change too.

If new bonds pay less, your bond looks better, and its price increases.

If they pay more, your bond looks less appealing, and its price decreases.