Questions: What is the price (expressed as a percentage of the face value) of the Treasury bond?

Transcript text: What is the price (expressed as a percentage of the face value) of the Treasury bond?

Solution

Solution Steps

Solution Approach

Identify the face value of the Treasury bond.
Determine the current market price of the Treasury bond.
Calculate the price of the Treasury bond as a percentage of its face value using the formula: \(\text{Price Percentage} = \left(\frac{\text{Market Price}}{\text{Face Value}}\right) \times 100\).

Step 1: Identify Given Values

We are given the face value and the market price of the Treasury bond:

Face Value (\(FV\)) = 1000
Market Price (\(MP\)) = 950

Step 2: Calculate the Price as a Percentage of the Face Value

The price of the Treasury bond as a percentage of its face value is calculated using the formula: \[ \text{Price Percentage} = \left(\frac{\text{Market Price}}{\text{Face Value}}\right) \times 100 \] Substituting the given values: \[ \text{Price Percentage} = \left(\frac{950}{1000}\right) \times 100 = 95.00\% \]