When an investor purchases a $1,000 par value U.S. Treasury bond that was quoted at 97.16, the investor:
A. receives 97.5% of the stated coupon payments.
B. receives $975 upon the maturity date of the bond.
C. pays 97.5% of face value for the bond.
D. pays $1,025 for the bond.
Answer:C
When an investor purchases a $1,000 par value U.S. Treasury bond that was quoted at 97.16, the investor:
A. receives 97.5% of the stated coupon payments. B. receives $975 upon the maturity date of the bond. C. pays 97.5% of face value for the bond. D. pays $1,025 for the bond.