For T-bonds, how is the interest payment quoted?

The interest payment on T-bonds, or Treasury bonds, is quoted as a percentage of par value plus 32nds. This is the standard method of quoting bond prices and yields in the U.S. Treasury market.

When T-bonds are traded, their prices are expressed based on a fraction of their face value, typically in terms of 100. The interest, or coupon payment, is stated as a percentage of this par value. In addition, the quote includes 32nds to specify smaller moves in the bond’s price. For example, if a T-bond has a coupon rate of 5%, it means that it pays 5% of its face value annually. Adding the 32nds notation allows precise pricing, which is crucial in the bond market where small changes can have significant financial impacts.

The other options do not accurately reflect how interest payments on T-bonds are quoted in practice.