A bond traded at 102½ means that:

By Rebecca
1 Min Read

A bond traded at 102½ means that:

A. The bond pays 2.5% interest.

B. The bond traded at 102.5% of its par value.

C. The market rate of interest is 2.5%.

D. The bonds were retired at $1,025 each.

E. The market rate of interest is 2½% above the contract rate.

Answer:

B. The bond traded at 102.5% of its par value.

Explanation:

Bonds are often traded on stock markets for their par value plus any interest that has accrued during the holding period. Bonds with a par value of 100 and a current market price of 102.5 indicate that the bond’s par value is 100 and the extra 2.5 indicates accrued interest.

A bond traded at 102½ means that:

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