Question

A bond traded at 102½ means that: Multiple Choice The bond pays 2.5% interest. The bond traded at 102.5% of its par value. The market rate of interest is 2.5%. The bonds were retired at $1,025 each. The market rate of interest is 2½% above the contract rate.

Answer 1

Answer:

A bond traded at 102½ means that the bond traded at 102.5% of its per value.

Explanation:

Par value of a bond is the face value of that bond.

It is important for a bond or fixed-income instrument because it is used to determine the maturity value as well as the dollar value of coupon payments.

The market price of a bond may be above or below par, depending on factors affecting the bond; Factors such as the level of interest rates and the bond’s credit status.