Consider the following three bond quotes:

a Treasury note quoted at 97.844,
a corporate bond quoted at 103.25,
a municipal bond quoted at 101.90.

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? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Respuesta :

Answer:

Treasury Note $9,784.4

Corporate Bond $10,325

Municipal Bond $10,190

Explanation:

Bonds are quoted on discount or premium prices, the quoted price under 100 is on discount and over 100 is on premium.  

Treasury Note

It is quoted at the discounted price of 97.844% of par

Face value = $1,000

Value of Note = $1,000 x 97.844% = $9,784.4

Corporate Bond

It is quoted at the premium price of 103.25% of par

Face value = $1,000

Value of Note = $1,000 x 103.25% = $10,325

Municipal Bond $10,190

It is quoted at the premium price of 101.90% of par

Face value = $1,000

Value of Note = $1,000 x 101.90% = $10,190

The three bond quotes are:

First, Treasury note $9,784.4

Second, bond certificate $10,325

Third, bond $10,190

Calculation of Bond Quotes?

According to Bonds are quoted on discount or premium prices, Then the quoted price under 100 is on discount and over 100 is on premium.

Treasury Note

When It is quoted at the discounted price of 97.844% of par

After that, Face value is = $1,000

Then Value of Note is = $1,000 x 97.844% = $9,784.4

Corporate Bond

When It is quoted at the premium price of 103.25% of par

Then the Face value is = $1,000

After that Value of Note is = $1,000 x 103.25% = $10,325

Municipal Bond $10,190

When it's quoted at the premium price of 101.90% of par

Now, The Face value is = $1,000

Then Value of Note is = $1,000 x 101.90% = $10,190

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