A $1,000 face value bond has a bid quote of $101.254 and a bid-ask spread of...
A $1,000 face value bond has a bid quote of $101.254 and a bid-ask spread of 0.241. What price must you pay to purchase this bond? Ignore any accrued interest or trading costs.
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Homework Answers
The bid quote is $101.254
the bid ask spread is 0.241
So, the ask rate is = $101.254 + 0.241
= $101.495
So, the price which we must pay to purchase this bond is = $1000 * $101.495
= $101,495
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