0

From what I understand about corporate bonds, there can be three prices: the current price, the bid price, and the ask price.

So a corporate bond can have a current price of 99.01, a bid price of 98.01, and a ask price of 100.01.

All I know is that the ask price is always higher than the bid price. My question is if I want to buy this bond, what would be the actual price I pay? And how would that be calculated? Thanks.

2
  • 1
    Wouldn't the answers for bid, ask, and what would I pay be similar to those of any other equity in an open-outcry market? If so, this is largely a duplicate of past questions about how buyer and seller are matched up..
    – keshlam
    Jul 23, 2023 at 21:02
  • There is no single "current" price. There are two different prices depending on whether you're buying or selling. There is also a "last" price which may be completely disconnected from the bid/ask in volatile markets. Sometimes information sites will quote a "midpoint" that is only appropriate for analysis if you're not actually buying or selling. There's no guarantee that you can trade at that price.
    – D Stanley
    Jul 24, 2023 at 13:51

1 Answer 1

1

The bid price is the price at which the dealer is willing to buy the bond from you. The ask price the price at which the dealer sells the bonds to you.

Understanding bid ask prices follows a simple rule, you pay the price that makes you worse off.

No need to calculate the price, it's quoted.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .