(Q. 16 IN B) WHEN AN INVESTOR PURCHASES A $1,000 PAR VALUE BOND TH...

11. (Q. 16 in B) When an investor purchases a $1,000 par value bond that was

quoted at 97.16, the investor:

A) pays $971.60 for the bond.

B) pays $1,029.23 for the bond.

C) receives $971.60 upon the maturity date of the bond.

D) receives 97.16 percent of the stated coupon payments.

Answer A

Bond prices are quoted as a percentage of their face value. So the bond in

question has a price of 97.16% × $1,000 = $971.60.