Reading bond prices

[Greg Nowell]

Since there seems to be a great deal of interest in
these matters, a brief note on reading bond prices, so
that interested folks can follow this as well as the
DOW.

The price of a bond varies inversely with its yield.
The yield on a fixed yhield bond moves UP when the
price (what the bond sells for) moves DOWN.  The yield
on a fixed yield bond moves DOWN when the price moves
up.

For reasons which elude me traders like fractions.
Bonds are measured in 32nds.  32/32=$10, that is to
say, a movment of 32/32 UP in the price (causing a fall
in yield) indcates the bond moved UP from $1000 to
$1010.  18/32=$5.00, 4/32=1.25.

Today 30 year treasuries moved UP in price.  Yields
fell from 5.09% to 4.96%.  Per $1000, that corresponds
to an increase of 1 31/32, or $19.6875.

--
Gregory P. Nowell
Associate Professor
Department of Political Science, Milne 100
State University of New York
135 Western Ave.
Albany, New York 12222

Fax 518-442-5298