Answer :
The notation 101-1/4 in the S&P Bond Guide means that the corporate bond is priced at 101.25% of its face value, which computes to $1,012.50 if the bond's face value is $1,000. This notation is standard in the bond markets and varies based on market conditions and the creditworthiness of the issuer.
The main answer to your question is option A) 101-1/4. This notation represents the value of a bond in the bond market where the number before the dash is the percentage of the face value and the fraction after the dash represents the additional fraction of 1% of the face value. In this case, 101 means 101% of the face value and 1/4 represents 0.25% of the face value. When you multiply the face value (generally $1,000 for corporate bonds) by 101.25% (101% + 0.25%), you get $1,012.50.
To explain further, this notation is typical in bond trading. Bonds are usually traded in $1,000 increments, which is referred to as the face value or par value. The prices of bonds fluctuate based on market conditions and the credit rating of the issuer, as described in Figure 17.5.
In conclusion, when looking at bond prices, it is important to understand the notation used in bond markets. Hence, a corporate bond valued at $1,012.50 is shown in the Standard & Poor's Bond Guide as 101-1/4. Knowing the notation will help you make informed decisions when trading bonds.
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