12. Bond Quotes Consider the following bond quote: a municipal bond quoted at 101.25. If the municipal bond has a par value of $5,000, what is the price of the bond in dollars?
To calculate the price of the bond in dollars, you need to multiply the bond quote by the par value.
In this case, the bond quote is 101.25, which means the bond is priced at 101.25% of its par value.
To convert the bond quote to a decimal, divide it by 100. So, 101.25 / 100 = 1.0125.
Now, multiply the decimal bond quote by the par value to get the price of the bond in dollars.
Price of the bond = 1.0125 * $5,000 = $5,062.50.
Therefore, the price of the municipal bond in dollars is $5,062.50.