How much would you expect to pay for a $10,000 stripped Treasury bond quoted at 101:16?
A) $10,150.00
B) $10,000.00
C) $101.16
D) $10,160.00
E) $1,011.60

Question

Quizplus · Accepted Answer

A stripped Treasury bond is a Treasury security that does not pay periodic interest payments but rather provides the full face amount (and any applicable inflation adjustments) at maturity. The quoted price of 101:16 means that the bond is trading at a premium, and that the price is 101 and 16/32nds percent of the face value. To determine the actual price, you need to calculate 101 and 16/32nds percent of $10,000, which is $10,150. Therefore, the best choice is A.

How Much Would You Expect to Pay for a $10,000