You purchase a 10 3/8s February $10,000 par Treasury Note at 103:11 and hold it for exactly one year at which time you sell it.What is your rate of return if your selling price is 101:13?
A) 8.14%
B) 8.16%
C) 8.22%
D) 8.32%
E) 8.47%

Question

Quizplus · Accepted Answer

Purchase Price = [(103 + 11/32)¸ 100] × 10,000 = $10,334.375
Selling Price = [(101 + 13/32)¸ 100] × 10,000 = $10,140.625
Interest = 10 3/8% of 10,000 = $1,037.50
 
$\begin{aligned}
\text { Return } &=\left(P_{\text {end }}-P_{\text {beg}}+\text { Interest }\right) \div P_{\text {beg }} \
&=(10,140.625-10,334.375+1,037.50) \div 10,334.375 \
=& 8.16 \%
\end{aligned}$

You Purchase a 10 3/8s February $10,000 Par Treasury Note