A T-Bond with a $10,000 par is quoted at a bid of 92:11 and an ask of 92:17. If you bought the bond and then immediately sold it at the same quotes, how much money would you gain or lose (ignore commissions)?

Question

Quizplus · Accepted Answer

The bid-ask spread is 6/32 or 0.1875 points. Since the investor is buying at the ask price and selling at the bid price, they will lose the amount of the spread. Therefore, the answer is -$18.75 (option C).

A T-Bond with a $10,000 Par Is Quoted at a Bid