Answer:
The price that will be paid for a U.S. Treasury bond with an ask price of 135.4062 and face value of $100,000 is
$135,406.20
Explanation:
a) Data and Calculations:
Face value of the treasury bonds = $100,000
Ask price of the treasury bonds = 135.4062
Price to be paid = $100,000 * 135.4062/100 = $135,406.20
b) Bond prices are stated as percentages of their face values. The asking price of 135.4062 for the treasury bond with a face value of $100,000 means that is can be bought for $135,406.20. If the price is 100, then it is priced at par and will be bought at $100,000. If the price is 98, then it is priced at a discount and will be bought at $98,000.
