A BOND TRADED AT 102.5 MEANS THAT?

a) the down payment pays 2.5%interest
b) the down payment traded during 1025 per 1000 bond.
c) the marketplace rate seductiveness is 2.5%
d) the holds were late during 1025 each.
e) the marketplace rate of seductiveness is 2.5 % on top of the stipulate rate.

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{ 2 comments… read them below or add one }

wabboc July 30, 2010 at 10:47 am

B

PBeaud July 30, 2010 at 11:46 am

B. the bond traded at 1025 per 1000 bond. Bond prices are stated as a percent of par value, therefore 102.5 means that the bond price is 102.5% of par value. Apply this to the $1,000 par value, and voila, $1,025 per $1,000 face.

This is probably the result of the bond paying higher than average coupon payments, so the yield will be someqhat comparable to other bonds of similar quality and maturity.

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