When an investor purchases a $1,000 par value bond that was quoted at 97.16,the investor:
A) receives 97.5% of the stated coupon payments.
B) receives $975 upon the maturity date of the bond.
C) pays 97.5% of face value for the bond.
D) pays $1,025 for the bond.

Question

Quizplus · Accepted Answer

The bond was quoted at 97.16, which means the investor is purchasing the bond at 97.16% of its face value. Since the face value is $1,000, the investor would pay $971.60 (0.9716 x $1,000) for the bond, which is 97.5% of face value as stated in option C.

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