- how municipal bonds are quoted
- each=1/100 of 1% of .0001
- 7.85 basis=7.85% yield to maturity
Bonds at par, premium, discount
- face value, selling at 100, basis=nominal yield
- above face value, sell at premium, above 100, basis<nominal yield. Quoted at yield to call
- below face value, sold at discount, below 100, basis>nominal yield. Quoted at yield to maturity
firm quote
- dealer is ready to sell at set price
- dealer can place time restriction on quote
- dealers can recall bid during hour
- when dealers call traders, traders must be ready to buy or sell immediately
- forcing bid to get investors to make up minds
subject quote
- info only
- for general obligation or revenue bond
- gives investor idea of price range of bond
Your firm's trading department is called by another broker/dealer that is interested in purchasing bonds from your firm. The trading department gives a quote of 7.80%, good for an hour with a 5 minute recall. Which of the following is true is true about this quote?
- the other firm has control of the bonds for one hour
- during the hour your firm can call the other firm back with a five minute "fill or kill".
- During the hour, your firm can show the bonds
- Your firm can't sell bonds until you give other firm 5 minute call
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