Calculate the total dollar amount you would pay at the quoted price for the bond: Bond price 114 Number of bonds purchased 2

Question

I need helping finding how much the total is for the bond

Answer 1

When bonds are originally issued we call these bond, original issue bonds. Their par value at the time of issue is $1,000. They are quoted as a percentage of par in the secondary market. As interest rate go up or down they will have an inverse relationship on the price of the bonds.

 

Corporate bonds are quoted in points. One points is equivalents to $10. A bond at par value is quoted at 100 or $1,000. A discount bond is a bond that is trading below par, so for example, a bond trading at 90 has a value of $900. Another discount bond trading at 94 1/8 would be worth 94.250% of $1,000 or par, so its value would be worth $942.50. A premium bond trading at 114 would be valued at $1,140. This bond is a case where interest rates have fallen. In general, when interest rates rise, bond prices fall. When interest rates fall, bond prices fall.

 

 

 

 

These two bonds are priced at $2,280

 

Answer 2

Usually bond price is based on the actual amount pay multiplies by 100

 

if the price is 114, then the actual payment will be 114/100 = 1.14

 

2 bonds = 2 par value

 

2*1.14 = $2.28 will be the amount you will pay