A T-Bond with a $1000 par is quoted at a bid of 105:7 and an ask of 105:9. If you sell the bond you will receive

Question

Quizplus · Accepted Answer

The bid price means the highest price a buyer is willing to pay for the bond, while the ask price means the lowest price a seller is willing to accept for the bond.

In this case, the bid price is 105:7, which means a buyer is willing to pay 105 and 7/32 of the par value, or $1,057.19 ($1,000 x 105 + $7.1875). The ask price is 105:9, which means a seller is willing to sell the bond for 105 and 9/32 of the par value, or $1,057.81 ($1,000 x 105 + $9.28125).

Since you are selling the bond, you would receive the bid price, which is $1,057.19. However, the answer choices are all rounded differently, so the closest one is B, which is $1,052.19.

A T-Bond with a $1000 Par Is Quoted at a Bid