Question
If a $1,000 face value U.S. Treasury bond is quoted at 99.5, then the bond can be purchased Blank______.
Multiple choice question.
for $995 less any accrued interest
for $995, which includes any accrued interest.
at 99.5 percent of face value plus any accrued interest
for $99.50 per bond
Multiple choice question.
for $995 less any accrued interest
for $995, which includes any accrued interest.
at 99.5 percent of face value plus any accrued interest
for $99.50 per bond
Answers
GPT-4o mini
The correct answer is:
**for $995 less any accrued interest.**
When a bond is quoted at 99.5, it means that the bond can be purchased for 99.5% of its face value. For a $1,000 face value bond, that amounts to $995. However, this price does not include any accrued interest that may be applicable, as bonds typically accrue interest over time, and buyers often pay the purchase price plus any accrued interest.
**for $995 less any accrued interest.**
When a bond is quoted at 99.5, it means that the bond can be purchased for 99.5% of its face value. For a $1,000 face value bond, that amounts to $995. However, this price does not include any accrued interest that may be applicable, as bonds typically accrue interest over time, and buyers often pay the purchase price plus any accrued interest.