Answer:
$1,145.83
Explanation:
The invoice price of the bond comprises of ask price and interest accrued for the period of 1 month.
The formula that can be derived for calculating the invoice price is as follows:
Invoice Price = Current Ask Price + Interest Accrued
Ask price is 114% of the par value, then the ask price will be:
= $1,000 × 114%
= $1,140
Interest will be accrued for 1 month only.
The interest for the whole year is:
= $1,000 × 7%
= $70
and for 1 month it would be:
= $70 × 1/12
= $5.83
Based on the above calculations, we get,
Invoice Price = Current Ask price + Interest Accrued
= $1,140 + $5.83
= $1,145.83
