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19 August, 13:06

Suppose that today's date is April 15. A bond with a 10% coupon paid semiannually every January 15 and July 15 is listed in The Wall Street Journal as selling at an ask price of 1,011.429. If you buy the bond from a dealer today, what price will you pay for it?

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  1. 19 August, 15:58
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    1,011.429 dollars

    Explanation:

    The dealer is willing to sale bond (we purchase from the dealer) at the ask price

    In this case 1,011.429 dollars per bond.

    If anyone want's to purchase those bonds will have to pay this amount per bond.

    The opposite to the ask price is the bid price, which is the price at which the dealer is willing to purchase bond (we sale it to the dealer).
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