"A customer purchases 3M of Chicago Water Authority 9% revenue bonds maturing in 2042 at 87. The interest payments are Mar 15th and Sept 15th. The trade took place on Tuesday, April 15th. How much accrued interest will the customer be required to pay the seller?"

$24

Explanation:

Given the following variables:

3M stands for $3,000 face amount of bonds (M is Latin for $1,000).

The day count is = 32 days interest

The bonds = 3 bonds

The interest rate = $90

The day basis = 360 days. (Considering that each month has 30 days)

Hence, using the formula

Accrued Interest = [Interest Rate X (Time Period / 365)] X Loan Amount

= 9% x (32 days / 360) x $3000

= $23.9999997 ≈ $24.

Therefore the final answer for accrued interest the customer will be required to pay seller = $24.

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