Bond and debenture pricing on the secondary market

Discussion in 'Investing' started by TomB16, Jun 19, 2019.

  1. TomB16

    TomB16 Well-Known Member

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    Can someone explain why bonds and debentures are sold in units of $1000 but the secondary market cites prices at 10% of value (in the $100 range)?
     
  2. TomB16

    TomB16 Well-Known Member

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    After speaking with five people at two brokerages, I believe I have the answer. The answer comes from Investopedia, not anyone at the brokerages. No one I spoke with was all that familiar with bonds and debentures to the required depth.

    A lot of debentures are now sold in $100 increments. It used to be $1000 was universal and my web portal tells me to cite $1000 increments but that is incorrect. It will happily accept $100 increments.

    I'm taken back by how little many of these folks know and yet they are adamant they are experts. All five were adamant they had answered my question of how come a $1000 bond is quoted at $105 when they had not answered it beyond "that's just how it works".

    The answer is: it's not a $1000 bond. It's a $100 bond so the $5 is the premium.
     

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