The price quotations of Treasury bonds in the Wall Street Journal show an ask price of 104.25 and a bid price of 104.125.As a seller of the bond, what is the dollar price you expect to receive?

Question

Quizplus · Accepted Answer

The bid price is the price at which a buyer is willing to purchase the bond and the ask price is the price at which a seller is willing to sell the bond. As a seller, you can expect to receive a price closer to the bid price than the ask price. Therefore, the dollar price you expect to receive is closer to the bid price of 104.125. Multiplying this by the bond's face value of $1000 gives us $1041.25. Thus, the correct answer is (C).

The Price Quotations of Treasury Bonds in the Wall Street