You purchase a 8 1/2s February $10,000 par Treasury Note at 105:16 and hold it for exactly one year at which time you sell it.What is your rate of return if your selling price is 105:16?

Question

Quizplus · Accepted Answer

Purchase Price = [(105 + 16/32)¸ 100] × 10,000 = $10,550.00
Selling Price = [(105 + 16/32)¸ 100] × 10,000 = $10,550.00
Interest = 8 1/2% of 10,000 = $850.00
 Return
$$
\begin{array}{l}
=\left(P_{\text {end }}-P_{\text {beg }}+\text { Interest }\right) \div P_{\text {beg }} \
=(10,550.00-10,550.00+850.00) \div 10,550.00 \
=8.06 \%
\end{array}
$$

You Purchase a 8 1/2s February $10,000 Par Treasury Note