Bond Quote

What Is a Bond Quote?

A bond quote is the last price at which a bond traded, communicated as a percentage of par value and changed over completely to a point scale. Par value is generally set at 100, addressing 100% of a bond's face value of $1,000. For instance, if a corporate bond is quoted at 99, that means it is trading at the vast majority of face value. In this case, the cost to buy each bond is $990.

How a Bond Quote Works

Price quotes for bonds are addressed by a percentage of the bond's par value, which is changed over completely to a numeric value, then, at that point, duplicated by 10, to decide the cost per bond. Bond quotes can likewise be communicated as portions.

For instance, corporate bonds are quoted in 1/8 additions, while government bills, notes, and bonds are quoted in augmentations of 1/32. Hence, a bond quote of 99 1/4 addresses 99.25% of par. Switching the percentage over completely to 99.25 and duplicating by 10 outcomes in a cost of $992.5 per bond. As well as being quoted as a percentage of par value, bonds may likewise be quoted with a yield to maturity (YTM).

The bond price and quote the calculation is genuinely clear, compared to different types of investments.

Types of Bond Quotes

Notwithstanding the last price at which a trade happened, full bond quotes incorporate bid and ask prices, which are calculated in a similar way as the quote on the last trade. The bid is the highest price level buyers will pay for the bond at the hour of the quote. For bond venders seeking immediate trade executions, the bid is the possible price for the trade. The ask is the most minimal price level on bonds to be sold at the hour of the quote.

The difference between the bid and the ask price is known as the "spread." In a full quote, bonds with high levels of liquidity, like Treasuries, generally have spreads of a couple of pennies between the bid and the ask price. Then again, the spreads on corporate bonds with lower levels of liquidity can surpass $1. For instance, a full quote on a illiquid corporate bond could list a last trade of $98, with a bid of $97 and an ask price of $99.

Bonds can likewise be quoted in terms of their yields to maturity, which is regularly finished for reference purposes, as opposed to trade execution. For instance, the financial media frequently quotes the 10-year Treasury note by its YTM, to give investors a reference point for bond price changes.

Highlights

• Bond quotes may likewise be communicated as parts.
• The par value is generally set at 100, which addresses 100% of a bond's $1,000 face value.
• A bond quote alludes to the last price at which a bond traded.
• Bond quotes are communicated as a percentage of par (face value) and switched over completely to a point scale.