in a treasury bond quote with a 1000 face value you find the bid is equalt...
in a treasury bond quote with a 1000 face value you find the bid is equalt to 100-24 and thenask is equal to 1---26 you could buy this bond for 1008.25
True ( 100 + 26 * 1/32) = 1008.25
Can someone explain how the equation to the left equates to 1008.25
And explain where 1/32nds comes from.
I know the anwser is True, but i'm not sure how to prove that?.. please explain, thank you
Homework Answers
True.
( 100 + (26 * 1/32)) = 1008.125
26 * 1/32 = 0.8125
Thus, 100 + 0.8125 = 100.8125
Face value = 1000
100.8125 * 1000 / 100 = 1008.125
You could buy this bond for 1008.125
Normal fraction used for Treasury security prices is 1/32.
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