18.2.5 Specify Type of Price Quotation

The method in which price is quoted is a feature of the market where security is traded. Each market may use a particular price quotation method. The price of a security can be quoted in the following ways: Price - in this method, the total price of the security is quoted. The total price can be expressed as:

Price - in this method, the total price of the security is quoted. The total price can be expressed as: (Face Value ± Premium or Discount) + Accrued Interest (if the interest quotation method is Flat)

% Price - the price is quoted as a percentage, as follows:

% Price = (Market price / Face value) x 100

% Discount - in this case, the price is quoted based on the discount percentage at which the security is bought or sold.

% Premium - in this case, the price is quoted on the basis of the premium percentage at which the security is bought or sold.

Premium - here, the price is quoted on the basis of the premium at which the security is boughtor sold. That is, the differential between the face value of the bond and the price at which it isbought or sold.

Discount - the price is quoted on the basis of the discount at which the security is bought or sold. That is, the differential between the face value of the bond and the price at which it is bought or sold.

YTM - the price is quoted based on its yield to maturity.

The yield on a discounted instrument is measured by its yield to maturity (YTM). YTM is the yield on a security, calculated from the purchase date to its maturity. The YTM keeps changing with the market price. In case the market price increases above the straight discounted price, YTM would decrease and vice versa.

The price using this quotation method is calculated thus:

Based on the deal quantity and the price quotation method, the deal amount is determined. Irrespective of the price quotation method that is used, the net result is the same. The price quotation specifications defined for the product, under which the security is maintained, will default in this screen. However, this quotation method can be specific for a security.