Bond Returns The UK government issues a five-year bond, which makes annual coupon payments of 5 per cent and offers a yield of 3 per cent annually compounded. Suppose that, one year later, the bond still yields 3 per cent. What return has the bondholder earned over the 12-month period? Now suppose that the bond yields 2 per cent at the end of the year. What return would the bondholder earn in this case?