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 buyer of the bond, what is the dollar price you expect to pay?
A) $1,048.00
B) $1,042.50
C) $1,044.00
D) $1,041.25
E) $1,040.40

Question

Quizplus · Accepted Answer

The ask price is the price at which you can buy the bond. Since the ask price is 104.25, and Treasury bonds have a face value of $1,000, the dollar price you expect to pay is 104.25% of $1,000, which is $1,042.50.

The Price Quotations of Treasury Bonds in the Wall Street