## DEFINITION of 'Dollar Price'

The dollar price is the percentage of par, or face value, at which a bond is quoted. Dollar price is one of two ways that a bond price can be quoted, the other is by yield.Â

Next Up

## BREAKING DOWN 'Dollar Price'

Bonds are used by companies, municipalities, states, and U.S. and foreign governments to finance a variety of projects and activities. For example, a municipal government may issue bonds to fund the construction of a school. A corporation, on the other hand, might issue a bond to expand its business into a new territory.

The price of a bond can be quoted in one of two ways by the various exchanges: by dollar price and by yield. Frequently, providers of bond quotes publish both the dollar price and yield concurrently. A bond's yield indicates the annual return until the bond matures. For example, if an investor purchases a bond with a 10% coupon at its \$1,000 par value, the yield is 10% (\$100/\$1,000). The dollar price, on the other hand, represents a percentage of the bond's principal balance, also called its par value. A bond is a loan (made to a corporate or government entity) and the par value is the loan amount.

For example, if the price of a bond is \$1,120 and the par value of the bond is \$1,000, the bond would be quoted at 112% in dollar terms. A bond that is selling at par (at its face value) would be quoted at 100 in terms of dollar price. A bond that is trading at a premium will have a price greater than 100; a bond that is traded at a discount will have a price that is less than 100.

As the price of a bond increases, its yield decreases. Conversely, as bond prices decrease, yields increase. In other words, the price of the bond and its yield are inversely related.

RELATED TERMS
1. ### Below Par

Below par is a term describing a bond whose market price is below ...
2. ### Discount Bond

A discount bond is a bond that is issued for less than its par ...
3. ### Dollar Bond

A dollar bond is a U.S. denominated bond that trades outside ...
4. ### Bond Quote

A bond quote is the price at which a bond is trading, typically ...
5. ### Current Yield

Current yield is the annual income (interest or dividends) divided ...
6. ### Par Value

Par value is the face value of a bond, or for a share, the stock ...
Related Articles
1. Managing Wealth

### How Bond Prices and Yields Work

Understanding bond prices and yields can help any investor in any market.
2. Investing

### Corporate Bond Basics: Learn to Invest

Understand the basics of corporate bonds to increase your chances of positive returns.
3. Investing

### The Basics Of Bonds

Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
4. Investing

### 4 basic things to know about bonds

Learn the basic lingo of bonds to unveil familiar market dynamics and open to the door to becoming a competent bond investor.
5. Investing

### Find The Right Bond At The Right Time

Find out which bonds you should be investing in and when you should be buying them.
6. Investing

### Top 6 Uses For Bonds

We break down the stodgy stereotype to see what these investments can do for you.
7. Investing

Corporate bonds can provide compelling returns, even in low-yield environments. But they are not without risk.
8. Investing

### Simple Math for Fixed-Coupon Corporate Bonds

A guide to help to understand the simple math behind fixed-coupon corporate bonds.
RELATED FAQS
1. ### How a bond's face value differs from its price

Discover how bonds are traded as investment securities and understand the various terms used in bond trading, including par ... Read Answer >>

3. ### When is a bond's coupon rate and yield to maturity the same?

Find out when a bond's yield to maturity is equal to its coupon rate, and learn about the components of bonds and how they ... Read Answer >>
Hot Definitions
1. ### Working Capital

Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
2. ### Bond

A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
3. ### Compound Annual Growth Rate - CAGR

The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
4. ### Net Present Value - NPV

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
5. ### Price-Earnings Ratio - P/E Ratio

The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
6. ### Internal Rate of Return - IRR

Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.