John Hull mentioned in his book using Cash Price(Dirty Price) instead of Quoted Price(Clean Price) in pricing a bond option using Black-Scholes. It confuses me as it seems more natural to assume the return of bond price stripped of accrued interest follows a Geometric Brownian Motion. Accrued interest ifself does not have any stochastic components.

Does anybody have a good explanation on this distinction?

John Hull mentioned in his book using Cash Price(Dirty Price) instead of Quoted Price(Clean Price) in pricing a bond option using Black-Scholes. It confuses me as it seems more natural to assume the return of bond price stripped off accrued interest follows a Geometric Brownian Motion. Accrued interest itself does not have any stochastic components.

Does anybody have a good explanation on this distinction?

John Hull mentioned in his book using Cash Price(Dirty Price) instead of Quoted Price(Clean Price) in pricing a bond option using Black-Scholes. If confuses me as it seems more natural to assume the return of bond price stripped of accrued interest follows a Geometric Brownian Motion. Accrued interest ifself does not have any stochastic components.

Does anybody have a good explanation on this distinction?

John Hull mentioned in his book using Cash Price(Dirty Price) instead of Quoted Price(Clean Price) in pricing a bond option using Black-Scholes. It confuses me as it seems more natural to assume the return of bond price stripped of accrued interest follows a Geometric Brownian Motion. Accrued interest ifself does not have any stochastic components.

Does anybody have a good explanation on this distinction?