Question

Consider the following three bond quotes; a Treasury note quoted at 102:26, and a corporate bond quoted at 99.25, and a municipal bond quoted at 102.65. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars?

Answer 1

The Price of the Bonds are calculated by multiplying the Par Value of the Bond with the Quoted Percentage of the Bond

Price of the Treasury Note

Price of the Treasury Note = Par Value x Quoted Percentage of the Bond

= $1,000 x [102% + (26/32)%]

= $1,000 x (102% + 0.813%)

= $1,000 x 102.813%

= $1,028.13

Price of the Corporate Bond

Price of the Corporate Bond = Par Value x Quoted Percentage of the Bond

= $1,000 x 99.25%

= $992.50

Price of the Municipal Bond

Price of the Municipal Bond = Par Value x Quoted Percentage of the Bond

= $5,000 x 102.65%

= $5,132.50

Hence, the final answers are;

Price of the Treasury Note = $1,028.13

Price of the Corporate Bond = $992.50

Price of the Municipal Bond = $5,132.50