(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.