Final answer:
A Treasury note trading at 74:20 means it's trading at 74.20% of its face value. A $100,000 face value Treasury note will cost $74,200 when trading at this price.
Step-by-step explanation:
When a Treasury note is trading at 74:20, it indicates that the note is trading at 74.20% of its face value. To calculate the cost of a $100,000 face value note at this price, we multiply the face value of the note by the percentage:
- Cost = Face Value × Trading Percentage
- Cost = $100,000 × 74.20%
- Cost = $100,000 × 0.742
- Cost = $74,200
Therefore, a $100,000 face value Treasury note trading at 74:20 will cost $74,200.