y bond prices in 100 but face value in $1000

Exec summary — Correct way to compute transaction/clearance amount of 5 bonds sold at $99.02 is 99.02% * $1000/bond * 5 bonds

Convention — Bond prices are quoted as a percentage of face value aka principal amount aka par amount which is typically $1000

People often imprecisely talk about a bond price as “2 cents up” at $99.02. Truth is, that price means 99.02% of face value. Somehow, the implicit $100 face-value seems to live on.

In major sell-side dealing rooms of corporate/muni bond, minimum round lot is 5 BONDS with total face value $5000. Investopedia says — In bond trades, a round lot is usually $100,000 worth of bonds. That’s not the reality as of 2011.

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