Question

Bonds with a face value of $250,000 and a quoted price of 101 have a selling price of:______

Answer 1

The selling price of bonds with a face value of $250,000 and a quoted price of 101 is $252,500. This is calculated by multiplying the face value by the quoted price expressed as a percentage.

Step-by-step explanation:

The student's question pertains to the selling price of bonds with a known face value and quoted price. Specifically, bonds with a face value of $250,000 and a quoted price of 101 indicate a selling price of 101% of the face value. To calculate the selling price, you multiply the face value by the quoted price as a percentage:

Selling Price = Face Value × (Quoted Price / 100)
Selling Price = $250,000 × (101 / 100)
Selling Price = $250,000 × 1.01
Selling Price = $252,500

Therefore, the selling price of the bonds is $252,500.

Answer 2

The selling price of the bonds is $252,500.

Step-by-step explanation:

The selling price of bonds can be calculated based on their quoted price and face value. In this case, the face value of the bonds is $250,000, and the quoted price is 101. To find the selling price, multiply the quoted price by the face value and divide by 100: $250,000 * 101 / 100 = $252,500.

Understanding the relationship between face value, quoted price, and selling price is critical in making informed investment decisions, especially considering the risk of the bond and current interest rates in the economy which affect the bond's attractiveness to investors.