Asked by Joshua Palesano on Apr 28, 2024
Verified
A corporate bond is listed in the Wall Street Journal and shows an ask price of 98.62. If the corporate bonds have a par value of $1,000, what dollar amount should a buyer expect to pay?
A) $98.62
B) $986.20
C) $1,000.00
D) $1,081.25
E) $1,140.40
Par Value
The face value of the bond. The payment to the bondholder on the bond’s maturity date.
Ask Price
The lowest price a seller is willing to accept for an asset in the market.
Corporate Bond
A debt security issued by a corporation to raise funding, which offers interest payments to holders until maturity.
- Grasp the concept of bond valuation and pricing in the market.
Verified Answer
HB
Hamit BüyükgüzelMay 03, 2024
Final Answer :
B
Explanation :
The ask price of 98.62 means that the bond is priced at 98.62% of its par value. Since the par value is $1,000, the cost to buy the bond would be 98.62% of $1,000, which is $986.20.
Learning Objectives
- Grasp the concept of bond valuation and pricing in the market.