SIE: 2.7.1. Bond Points And Basis Points

2.7.1.  Bond Points and Basis Points

Bonds are “quoted” in the market in terms of their price and their yield to maturity. A bond quote means the price at which a bond is trading—that is, its market price. The market price for bonds is quoted as a percentage of the bond’s par value. Percentages are expressed in terms of bond points. A bond point represents one hundredth or 1% of par. Thus, 10 bond points is 10% of par, and five bond points is 5% of par. Because corporate bonds typically have a par value of $1,000, one bond point is equal to $10.

Corporate bonds are typically quoted in increments of one-eighth (see first two examples, following). They may also b