Question

Consider the following three bond quotes: a Treasury note quoted at 97.844, a corporate bond quoted at 103.25, and a municipal bond quoted at 101.90. 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

Answer:

$9,784.4

$10,325

$10,190

Explanation:

Given that:

• a Treasury note quoted at 97.844
• a corporate bond quoted at 103.25
• a municipal bond quoted at 101.90

As we know, The bonds are quoted on the price discount or premium, the listed price is a discount of less than 100 and more than 100 are on premiums

So, for a Treasury note quoted at 97.844% (discount price), we have:

Par value:  $1,000

=> Value of the bond  = $1,000 x 97.844% = $9,784.4

For a corporate bond quoted at 103.25% (premium price), we have:

Par value:  $1,000

=> Value of the bond  = $1,000*103.25% =  $10,325

For a municipal bond quoted at 101.90% (premium price), we have:

Par value:  $5,000

=> Value of the bond = $5,000*101.90% = $10,190

Hope it will find you well.