The price quotations of Treasury bonds in the Wall Street Journal show an ask price of 104:08 and a bid price of 104:04. As a seller of the bond, what is the dollar price you expect to pay?

The dollar price you expect to pay is $1041.25

Explanation:

Given

Asking Price = 104:08

Bidding Price = 104:04

The bid price of the dealer is calculated as:

104 + 04 / (04 * 08) %

= 104 + 4/32 %

= 104 + 0.125 %

= 104.125%

= 1.04125

Assume that $1,000 represents a unit bond;

The bid price of the dealer is finally calculated as:

1.04125 of $1,000

= $1041.25

Hence, the dollar price you expect to pay is $1041.25

Answer:The price expected to pay $1,041.25

Explanation:

Ask price = 104:08

Bid price = 104:04

The bid price of the dealer received = 104 4/32 = 0.125

= 104.125%

Since bond is usually in $1000 denomination

104.125% * 1000

= 1041.25

=1,041.25

Therefore the dollar price expected to pay = $1,041.25