Bond Markets - Asked price the price a dealer is willing to...

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Chapter 7.5: Bond Markets Trading Volume in Bonds on any given day is many times that of the trading volume in stocks The largest securities market in the world in terms of trading volume in the U.S. Treasury Market One reason bond markets are so big is because the number of bond issues far exceeds the number of stock issues o Because a corporation would typically have only one common stock issue outstanding, but several bond issues outstanding In the bond market you often can not see the price or volume of trades Bid price – the price a dealer is willing to pay for a security
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Unformatted text preview: Asked price the price a dealer is willing to take for a security Bid-ask spread difference between the bid price and the asked price (represents the dealers profit) Treasury prices are quoted in 32nds If you buy a bond between the coupon payment dates, the price you pay is usually more than the price you are quoted because accrued interest is deducted to arrive at the quoted price Clean price price of a bond net of accrued interest (this is the price that is typically quoted) Dirty (full or invoice) price price of a bond including accrued interest...
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This note was uploaded on 12/06/2011 for the course FIN 3134 taught by Professor Ddklock during the Fall '08 term at Virginia Tech.

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