Why is a bond quoted at 98 instead of $980?

Open a bond screen for the first time and the prices look broken. Everything sits near 100. Nothing has a currency symbol. A number like 99.375 appears next to a number like 4.62. Here is how to read that screen.

Bonds are quoted as a percentage of face value

A bond price is not a currency amount. It is the price as a percentage of par.

100 means par — you pay exactly the face value.
98 means 98% of face value.
103.50 means 103.5% of face value.

Convert by multiplying: a bond quoted at 98 with $1,000 face costs $980. Quoted at 103.50, it costs $1,035.

Why do it this way? Because face values differ wildly across the market — $1,000 here, €100,000 there, $100 for many quoted government bonds. Percentage-of-par makes every bond on earth directly comparable on one axis. A bond at 97 is cheap relative to its own par whether that par is a thousand dollars or a hundred thousand euros.

The three states of a bond price

This vocabulary appears in every bond conversation:

At par — price = 100. Rare in practice, and usually only on the day of issue.
At a discount — price below 100. You pay less than you get back at maturity.
At a premium — price above 100. You pay more than you get back at maturity.

A premium bond looks like a mistake to newcomers: why pay $1,050 for something that returns $1,000? Because of the coupons in between. A bond paying a 7% coupon when comparable new bonds pay 4% is worth more than its face value — the extra coupon income is worth paying up for, and the premium you pay is precisely the market's valuation of that extra income. The next two lessons make this exact.

The thirty-seconds quirk

US Treasuries carry a historical oddity: they are often quoted in 32nds of a point, written with a hyphen or apostrophe.

99-16 means 99 and 16/32 = 99.50
101-08 means 101 and 8/32 = 101.25

Some venues go further, into 64ths or 128ths (a trailing + conventionally means half a 32nd). It is a fossil of pre-decimal pit trading that survived because the market never had a reason to change. Corporate and most non-US government bonds are quoted in plain decimals.

Price and yield on the same line

A bond screen usually shows price and yield side by side, and they always move in opposite directions. A worked pair:

A bond with a 5% coupon, $1,000 face:

Quoted at 100 → costs $1,000 → $50 a year on $1,000 → yield 5.00%
Quoted at 95 → costs $950 → $50 a year on $950 → 50 ÷ 950 = 5.26%
Quoted at 105 → costs $1,050 → $50 a year on $1,050 → 50 ÷ 1,050 = 4.76%

Same bond. Same $50 coupon, unchanged, because the coupon is glued to face value. Only the price moved, and the yield moved the opposite way — mechanically, by division. That is the seesaw in its most stripped-down form, and it is nothing more sophisticated than a fraction with a moving denominator.

(The numbers above are current yield — coupon divided by price. It ignores the gain or loss from the price drifting back to par at maturity. Lesson 4 of this unit fixes that.)

Try it now

Convert three quotes to cash on a $1,000 face bond: 96.25, 100.00, 102.75. (Answers: $962.50, $1,000, $1,027.50.)
Decode two Treasury quotes: 98-24 and 100-04. (Answers: 98.75 and 100.125.)
Take a bond with a 6% coupon and $1,000 face. Compute current yield at prices of 90, 100, and 110. (6.67%, 6.00%, 5.45%.) Notice you never once needed to know who the issuer was — this part is pure arithmetic.