The dirty price of a bond — also called the full price or invoice price — is the actual price paid by a bond buyer in the secondary market, which includes the bond's clean price (quoted market price) plus the accrued interest that has accumulated since the last coupon payment date up to the settlement date. Because bond issuers pay coupons on fixed scheduled dates, a buyer acquiring the bond between coupon dates is effectively compensating the seller for the interest that has accrued during the period the seller held the bond. The dirty price is the true transaction price — the amount that actually changes hands — while the clean price is the price typically quoted in bond markets (excluding accrued interest) to allow easier comparison across bonds with different coupon schedules. For fixed income investors and traders on Ventura Securities dealing in government securities, corporate bonds, and NCDs in the secondary market, understanding the distinction between dirty and clean price is essential for calculating the actual cost of bond purchases and correctly accounting for accrued income in portfolio valuations.
