Consider the following three bond quotes; a Treasury note quoted at 87:25, and a corporate bond quoted at 102.42, and a municipal bond quoted at 101.45. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars?
A)$872.50, $1,000, $1,000, respectively
B)$1000, $1,000, $1,000, respectively
C)$877.81, $1,024.20, $5,072.50, respectively
D)$1,000, $1,024.20, $1,001.45, respectively

Question

Quizplus · Accepted Answer

To convert the Treasury note quote of 87:25 to dollars, we need to multiply the quote by the par value and then divide by 100.

Treasury note price = (87 + 25/32) * $1,000 / 100 
Treasury note price = $872.50

To convert the corporate bond quote of 102.42 to dollars, we need to multiply the quote by the par value and then divide by 100.

Corporate bond price = 102.42% * $1,000 / 100 
Corporate bond price = $1,024.20

To convert the municipal bond quote of 101.45 to dollars, we need to multiply the quote by the par value and then divide by 100.

Municipal bond price = 101.45% * $5,000 / 100 
Municipal bond price = $5,072.50

Therefore, the prices of the three bonds in dollars are $872.50, $1,024.20, and $5,072.50 respectively. So, the correct answer is C.

Consider the Following Three Bond Quotes; a Treasury Note Quoted