When an investor purchases a $1,000 par value bond that was quoted at 97.162, the investor:
A) receives 97.162% of the stated coupon payments.
B) receives $971.62 upon the maturity date of the bond.
C) pays 97.162% of face value for the bond.
D)pays $10,971.62 for a $10,000 face value bond.

Question

Quizplus · Accepted Answer

When a bond is quoted at 97.162, it means that the investor pays 97.162% of the face value of the bond, or $971.62 for a $1,000 par value bond. The investor will still receive the full coupon payments based on the face value of the bond. Therefore, option A is incorrect as the investor would still receive the full stated coupon payments based on the face value of the bond. Option B is incorrect as it only refers to the maturity value of the bond, not the purchase price. Option D is incorrect as it refers to a $10,000 face value bond, which is not the same as the $1,000 par value bond in the question.

When an Investor Purchases a $1,000 Par Value Bond That