When the downloading clearing house or the pricing authority quotes a price which when multiplied by the number of shares does not produce the actual market value, a price factor is required.

Price x Shares x Price Factor = Market Value

In the case of bonds, the price factor is normally 10.0 because prices are quoted as a percentage of PAR Value.

Price Factor Example

If a bond price is quoted as 99.25, it does not mean that it is $99.25 per bond.  It means that the price is 99.25% of the PAR value (normally $1,000).

If an investor owns 5 bonds with a PAR value of $1,000, then the market value is 5 x 1000 x .9925 = $4,962.50.

If we just used the quoted "price" then you would calculate 5 x 99.25 = $496.25, ONE TENTH of the market value.

Therefore, the price factor is 10.

Price Factor and Downloads

Note: If you are placing your clients in investments which have price factors, you should keep them with the same custodian because different custodians may use different factors and that will cause errors in calculating market values.  The security has only one symbol or CUSIP and is therefore maintained in one place in Advisors Assistant.

Prices are stored in Advisors Assistant as the price that is sent by the downlload vendor.

See Also

Share Factor

Add / Modify Interest Bearing Investments