You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2019 and the bond has a par value of $1,000. Rate ?? 5.324 6.173 Maturity Mo/Yr May 29 a. Asked price b. Bid price May 34 May 44 Bid Asked 103.5488 103.5366 104.4978 104.6435 ?? ?? Chg +.3041 +.4317 +.5431 Ask Yld 6.039 ?? 4.071 a. In the above table, find the Treasury bond that matures in May 2044. What is the asked price of this bond in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the bid-ask spread for this bond is .0538, what is the bid price in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2019 and the bond has a par value of $1,000. Rate ?? 5.324 6.173 Maturity Mo/Yr May 29 a. Asked price b. Bid price May 34 May 44 Bid Asked 103.5488 103.5366 104.4978 104.6435 ?? ?? Chg +.3041 +.4317 +.5431 Ask Yld 6.039 ?? 4.071 a. In the above table, find the Treasury bond that matures in May 2044. What is the asked price of this bond in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the bid-ask spread for this bond is .0538, what is the bid price in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:You find the following Treasury bond quotes. To calculate the number of years until
maturity, assume that it is currently May 2019 and the bond has a par value of $1,000.
Rate
??
5.324
6.173
Maturity
Mo/Yr
May 29
a. Asked price
b. Bid price
May 34
May 44
Bid
Asked
103.5488 103.5366
104.4978
104.6435
??
Chg
+.3041
+.4317
?? +.5431
Ask
Yld
6.039
??
4.071
a. In the above table, find the Treasury bond that matures in May 2044. What is the
asked price of this bond in dollars? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
b. If the bid-ask spread for this bond is .0538, what is the bid price in dollars? (Do not
round intermediate calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Expert Solution
Step 1: Asked price and bid price
The holder of the bond decides to trade the investment at a specific rate, which is known as the asked price. The opposite party would be willing to trade it for another price, which is known as the bid price. The difference between them is known as the bid ask-spread.
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