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If a Treasury note has a bid price of $995, what would be the quoted bid price in the Wall Street Journal?

A) 99:50
B) 99:16
C) 99:80
D) 99:24
E) 99:32

Answer :

To determine the quoted bid price of a Treasury note in the Wall Street Journal, we must understand how Treasury notes are typically quoted. Treasury securities are usually quoted in fractions of a dollar.

In this specific case, the Treasury note has a bid price of $995. The notes are quoted as a percentage of their face value, which is typically $1,000.

Here are the steps to convert the dollar bid price to the quoted price:

  1. Calculate the price as a percentage of the face value:
    [tex]\text{Percentage} = \left( \frac{\text{Bid Price}}{\text{Face Value}} \right) \times 100[/tex]
    Substituting the given values, we have:
    [tex]\text{Percentage} = \left( \frac{995}{1000} \right) \times 100 = 99.5 \%[/tex]

  2. Express 99.5% as a bond price quote:
    Treasury notes are quoted in 32nds of a dollar. To convert the decimal portion to 32nds, multiply by 32:
    [tex]0.5 \times 32 = 16[/tex]

    Therefore, the quoted bid price is "99:16".

This means that for a Treasury note with a bid price of $995, the quotation in the Wall Street Journal would be written as 99:16.

Thus, the correct answer is B) 99:16.

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