A $100,000 Treasury bond has a bid price quote of 115:21 and an asked quote of 115:22. In dollars, what is the value of the bid-ask spread on this bond?

Question

Quizplus · Accepted Answer

To calculate the bid-ask spread, we subtract the bid price from the ask price:
$115,220 - $115,210 = $10.
However, since bond prices are quoted in 32nds, we need to convert this to a dollar value:
$10 / 32 = $0.3125 per bond.
Since there are 100 bonds in a $100,000 treasury bond, the total bid-ask spread is:
$0.3125 x 100 = $31.25.

A $100,000 Treasury Bond Has a Bid Price Quote of 115:21