Clean price

Definition

Clean price in plain English

When you buy a bond, you're buying an IOU that pays interest on set dates. Between those dates, interest is quietly piling up that belongs to whoever held the bond during those days. The "clean price" is the bond's price with that piled-up interest stripped out, so you can compare bonds fairly without the number jumping around just because a payday is near. Think of buying a fridge that already has groceries in it: the clean price is the fridge alone, and the groceries someone already stocked get charged to you separately.

Related Principles of Finance terms

• Accrued interest
• Allocation effect
• Basis
• Basis point
• Benchmark
• Bond-equivalent yield (BEY)
• Bootstrapping
• Callable bond
• Comparable company analysis (comps)
• Control premium