Review of Bond Nomenclature
Recall that bonds are quoted in the market in terms of their prices and yields to maturity. Price is quoted in terms of bond points. A bond point represents one hundredth of par, or $10 for bonds with a par value of $1,000. So a bond valued at par will be quoted at 100, meaning 100 points; a discount bond worth $900 will be quoted at 90. Similarly, a basis point equals one hund