On November 15, 2021, you purchased the Treasury bond issued with November 15, 2051 maturity and 1.875% coupon rate (with semiannual coupon payments).

The bond was priced to yield 1.94%. You are planning to keep the bond for 7 years and then sell it. You expect the yield to maturity at the time of the sale to be 2.04%. Also, you believe that you will be able to reinvest the coupon payments at an annual rate of 0.4%.


Calculate the expected annual percentage return of your investment. (Assume that the T-bond has a face value of $1 million.)