Bond quotes
Bond quotes express a bond's price as a percentage of its par value rather than in dollars. A corporate bond quoted at 98½ is trading at 98.5% of its $1,000 par, or $985.
Bond quotes are the pricing convention for debt securities. Instead of quoting a dollar price, the market quotes bonds in points, where each point equals 1% of the bond's par value. With the standard $1,000 par, one point is $10, so a bond quoted at 95 costs $950. Quotes above 100 mean the bond trades at a premium; below 100, at a discount.
The fractions differ by market. Corporate and municipal dollar quotes traditionally move in eighths of a point: a quote of 98½ equals $985, and 101⅛ equals $1,011.25. U.S. government securities like Treasury notes and bonds are quoted in 32nds of a point — a Treasury quote of 99-16 (or 99:16) means 99 and 16/32, or $995 per $1,000 of par.
Not every bond is quoted on price. Many municipal serial bonds are quoted on a yield basis — a "basis quote" like 4.25 states the bond's yield to maturity, and the dollar price is worked out from that yield. Comparing a basis quote to the coupon rate instantly reveals whether the bond trades at a discount (yield above coupon) or premium (yield below coupon).
Reading quotes quickly is a tested skill. The SIE covers corporate and government quote conventions directly, and the Series 65 and Series 66 expect you to translate quotes into dollar prices and to connect price, yield, and premium/discount status across corporate and federal agency securities.
Key takeaways
- Bonds are quoted as a percentage of par: one point equals 1% of par, or $10 on a $1,000 bond.
- Corporate and municipal dollar quotes use eighths of a point; Treasuries use 32nds.
- A quote of 98½ equals $985; a Treasury quote of 99-16 equals $995.
- Municipal serial bonds are often quoted on a yield basis instead of a dollar price.
- Quotes above 100 indicate a premium; below 100, a discount.