Bond Index

The values of nearly all bond market indexes are calculated using which of the following conventions for pricing and weighting, respectively? Pricing Weighting A. Trader priced Price B. Trader priced Market value C. Market priced Price D. Market priced Market value

A I think.

B. Trader priced Market value

Can you explain your answers please?

I am only guessing, traders have to price bonds. They don’t have automatic prices based on the market movements like stocks. Price weighting b.c there are millions of separate bond issues so to be market weighted doesn’t seem possible, but I am not sure on this.

I know it’s definitely A or B…I want to say B. It is trader priced because there are no exchanges for bonds and all bonds are traded OTC…thus it has to be trader priced…

Not mentioned anything in Schweser. Haven’t looked at the text ever. Super, how do you calculate MV of bonds. I agree with amber’s thought on price though. S

I think the answer is B.

yes B is the answer but i wanted somebody to justify it.

they are trader priced for the reason amber explained i think they are market-value weighted because they are trying to encompass the total return of all the bonds indexed

i think its from chap, that is about security markets, organization. i hate this chapter.

it should be in the reading dealing with security-market indices

That makes sense super, they wouldn’t use price if the trader is pricing it. Who would be right?

they are trader-priced because they are not traded continuously like stocks and it’s hard to determine their market price like that of a stock market-value weighted because they are trying to encompass the total return of all the bonds included in the index so i think the answer is B)