Asked by Jennifer Nicole on Jul 14, 2024
Verified
A Treasury bond is quoted at a price of 105:21. What is the market price of this bond if the face value is $1,000?
A) $105.21
B) $106.56
C) $1,052.10
D) $1,056.56
E) $1,065.60
Treasury Bond
A long-term government bond issued by the U.S. Treasury with a maturity period typically ranging from 20 to 30 years.
Face Value
The nominal or original value written on a financial instrument, such as a bond or stock certificate, not necessarily reflecting its market value.
- Ascertain the values and returns of bonds across diverse scenarios.
Verified Answer
KK
Kalaivani KumarJul 18, 2024
Final Answer :
D
Explanation :
The market price of the bond is calculated by taking the quoted price and converting it into a dollar amount based on the face value of the bond. The quoted price of 105:21 means 105 and 21/32 percent of the face value. To convert this to a dollar amount: 105 + (21/32) = 105.65625% of $1,000 = $1,056.56.
Learning Objectives
- Ascertain the values and returns of bonds across diverse scenarios.
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