MC Qu. 50 What price will be paid for ... What price will be paid for a U. S. Treasury bond with an ask price of 135.4062 if the face value is $100,000

The price that will be paid for a U.S. Treasury bond with an ask price of 135.4062 and face value of $100,000 is

$135,406.20

Explanation:

a) Data and Calculations:

Face value of the treasury bonds = $100,000

Ask price of the treasury bonds = 135.4062

Price to be paid = $100,000 * 135.4062/100 = $135,406.20

b) Bond prices are stated as percentages of their face values.  The asking price of 135.4062 for the treasury bond with a face value of $100,000 means that is can be bought for $135,406.20.   If the price is 100, then it is priced at par and will be bought at $100,000.  If the price is 98, then it is priced at a discount and will be bought at $98,000.

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