Personal Finance & Money Asked on December 29, 2020
I’m studying investment on my own. I’m learning about treasury bonds and there’s a question about calculating the asked price the previous day. It provides the answer but I don’t understand where the number came from.
Yield of maturity is 4.25%
Bid price 98:26
Asked price 98:29
Change -20
Ask yield 4.3156
Answer:
The bond sells for 98:26 which is a price of 98.813% of par or $988.13 and 98:29 ask or $989.06
This ask price corresponds to a yield of 4.3156%
The ask price fell 20/32 from its level yesterday, so the ask price then must have been 99.17 or $995.31
*Where’s does the 99.17 or $995.31 coming from? How do I calculate that? And why is 20/32? -20 is the change but where do 32 this number coming back?
Sorry it may sounds silly but I am studying on my own so I’m bit confused*
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