Value of a bond given the nominal and the price is (Nominal/£100) × price per £100 nominal. Which of the following represents this formula?

• A. (Nominal / 100) × price per £100 nominal
• B. Nominal × price per £100 nominal
• C. Price × 100
• D. Price per £100 nominal ÷ nominal

Answer: (B)

The value of the bond is found by applying the price per £100 nominal to the number of £100 blocks in the bond’s nominal value. That number of blocks is thenominal value divided by 100. So the correct expression is (Nominal ÷ 100) × price per £100 nominal.

For example, if the nominal value is £1,000 and the price per £100 nominal is 97.50, the value is (1000 ÷ 100) × 97.50 = 10 × 97.50 = £975.

Multiplying the full nominal by the price per £100 nominal would give a value 100 times too large, and the other forms don’t convert the units correctly.