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5 July, 03:23

What is the current price for a $8,500 bond that has a price quote of 89? What is the current price of the bond?

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  1. 5 July, 05:53
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    Current Price of bond = Number of Bonds * price quoted ... Equation 1

    Number of Bonds = Total Nominal value/100 ... Equation 2

    So this means that the formula for the computation of market value of all bonds held is same to the computation of total Market value of shares held.

    Market Value of bonds held = Total Nominal value/100 * price quoted ... EQ3

    Putting values in the equation 3

    Market Value of bonds held = $8500/100*$89 per bond = $7565

    Equation 3 was derived to enable you understand why we divide Total nominal value with 100 (par value). We do this to compute "Number of bonds held."
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