How to read a bond quoted on stock exchange / newspaper?

It is an important skill to read the bonds & stock prices quoted on stock exchanges and in financial journals. For explaining “How to read a bond on stock exchange” an extract of bond quote on New York Stock Exchange has been used.

reading-of-bonds-debentures
The quotes are taken from New York Stock Exchange. Companies’ names are intentionally marked black.

  1. Coupon rate: This represents the coupon / interest rate payable on the bond. 6.5 means 6.5% of face value of bond will be paid as interest. For example if face value is $ 1000, interest paid will be0.065 * 1000 = $65. Some journals & exchanges now separately show the coupon rate instead of with the name of company.

  2. Maturity Period: This represents the year when bond will mature. In other words it is maturity period of the bond. Here 28 means the bond will mature in 2028.

  3. Current Yield: Current yield is “the ratio of bond’s interest payment to its market price.” It is denoted in percentages. In our example 5.9 is calculated by dividing interest rate with closing market price i.e. $ 65 / $ 1095 = 0.059 which is equal to 5.9%. Some exchanges & journals show yield to maturity instead of current yield. Yield to maturity represent the expected return on bond till it matures whereas current yield represents expected return at the current point of time.

  4. Volume: This represents “how many totals bonds are traded in the market today.” The number quoted is stand alone. In other words 12 in our example means 12 bonds were either purchased or sold on this particular date.

  5. Closing Price: this represents the closing price of the bond for the particular day. This is quoted in percentages of Par / Face value of the bond. For example 109.50 does not mean that bond’s price is $ 109.95 instead it means bond’s price is 9.95% higher than its Par value which is $ 1,000 * 9.95% = 1095.
  6. Remember that closing price minus 100 is the percentage value. For example in our second example 89 means bond’s price is 11% (89 – 100 = -11) lower than its face value. Thus bond price is $ 1000 * 89% or $1000 – ($1000*11%) = $ 890.

  7. Net change: This represents the total change in the price of the bond from yesterday’s closing price. It is quoted in percentages. Our first bond has no change from yesterday whereas our other bond has positive change of 0.5% from yesterday which means the price has increased by 5% from yesterday.

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