Question

If the quote for a Treasury bond is listed in the newspaper as 99.25 bid, 99.26 ask, the actual price at which you can sell this bond given a $10,000 par value is _____________.

Answer 1

Answer:

$9,925

Explanation:

actual selling price = bid price (shown in %) x bond's par value = 99.25% x $10,000 = $9,925

The ask price is the price at which sellers want to sell their bonds, while the ask price is the price at which buyers will purchase a bond. Usually the ask price is higher than the bid price. If you wanted to purchase the bond, you would end up paying the ask price or $9,926.