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Last year, you purchased a 15-year Treasury Bond directly from the U.S. Treasury for $1,000 (par value is also $1,000). The coupon rate is 5.6%
Last year, you purchased a 15-year Treasury Bond directly from the U.S. Treasury for $1,000 (par value is also $1,000). The coupon rate is 5.6% (annual coupons) and, at the time of purchase, the market required rate of return on 10-year Treasuries was 5.6%. Over the past year, the FED has initiated several interest rate hikes, and the required rate of return on your bond is now 10%.
What is your total percentage return over the year by assuming that the first coupon payment was paid yesterday?
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