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Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceA 3.90% MGS is quoted at a clean price of RM101.35. Settlement is 61 days into a 182-day coupon period. What is the dirty (full) price per RM100?
MGS are quoted clean, so the buyer pays the clean price plus accrued interest. Accrued interest = (3.90 ÷ 2) × (61 ÷ 182) = RM0.65 per RM100, so the dirty price = 101.35 + 0.65 = RM102.00. Quoting RM101.35 leaves out the accrued interest the seller is owed. Accruing the full annual coupon over the period, 3.90 × 61 ÷ 182 = 1.31, gives RM102.66. Deducting the accrued interest, RM100.70, reverses the adjustment. Source: SIDC M7 Study Outline Topic 4 Section B.6 Pricing a Bond; BNM Financial Markets Information Portal, Trade Mechanism (MGS proceeds include accrued interest) and Types of Securities; CFA Institute Level I, 'Fixed-Income Bond Valuation: Prices and Yields' (as at October 2026).
Paying the clean price only. The settlement amount is the dirty price: clean price plus interest accrued since the last coupon.
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