how to read a bond quote
reading a bond quote may initially seem complex but it s straightforward with a little guidance let s start with an example now let s take each part in order vz40 this is the bond s unique ticker symbol used to identify it 101 25 the price in a quote is usually listed as a percentage of its face value typically 1 000 but occasionally 100 as here this is converted to a numeric value and multiplied by 10 to determine the cost per bond bond quotes can also be expressed as fractions the number 101 25 means the bond is trading at 101 25 of its 100 face value so the actual dollar price is 101 25 3 892 the yield is the annual return on the bond expressed as a percentage the most common yield metric used is yield to maturity which estimates the bond s total return if held to maturity assuming all coupon and principal payments are made as scheduled 1 sometimes a or will be included in the yield indicating it is slightly above or below the stated yield 06 30 28 the maturity date is when the bond will be repaid in full knowing the maturity date is crucial for assessing the bond s life span and the duration of the investment this bond matures and the principal is due june 30 2028 5 the coupon rate is the annual interest rate paid on the bond it is fixed and determined at the time the bond is issued this bond pays interest or a coupon of 5 of its face value annually aa the bond has a credit rating of aa meaning it has a high credit quality but slightly higher risk than aaa bonds bonds are rated by credit rating agencies like moody s s p and fitch 2 the credit rating reflects the bond issuer s creditworthiness and the likelihood of default a higher rating e g aaa or aa indicates a lower risk while a lower rating e g bb or c suggests a higher risk in the us bonds are categorized into one of three groups taking the above information together the sample bond quoted is trading above its face value at 101 25 has a yield of 3 892 based on the market price matures halfway through the year 2028 pays a 5 annual coupon and has a strong credit rating an investor purchasing this bond at 101 25 can expect a yield of 3 892 each year until it matures the following details may also be found in bond quotes bond quotes can be obtained from various sources including financial news outlets brokerage firms or financial advisors online platforms and financial data services also provide updated bond quotes types of bond quotesface value quotesbonds are quoted as a percentage of their 1 000 or 100 face value 7 for example a quote of 95 means the bond is trading at 95 of its initial face value face value quotes allow you to easily calculate the bond s dollar price by multiplying the quote by the face value this is the most common method for quoting u s treasury bonds bonds are quoted by their annual yield to maturity based on their current market price 7 for example 5 25 yield yield quotations allow easier comparison of bonds based on their yields rather than dollar prices corporate and municipal bonds are typically quoted by yield 8many bonds especially corporate and municipal bonds are quoted electronically on platforms like the municipal securities rulemaking board s electronic municipal market access system or the financial industry regulatory authority s trace system some bonds such as certain corporate bonds are traded over the counter and these may not be as easily accessible for quotes as exchange traded bonds bonds may be quoted based on the yield spread over a benchmark security like u s treasurys e g 175 basis points over treasurys 7spreads provide an easier comparison of non treasury securities with the risk free government bond yield rates some bonds are simply quoted as a dollar price without reference to face value e g 1 254 pure price quotes are useful for bonds that don t have a standard 1 000 face value like some mortgage backed and asset backed securities the different quote types serve alternate purposes allowing comparisons based on face value yields spreads or dollar prices they provide alternate ways to assess the value of a bond 