You purchase a 9 3/4s February $10,000 par Treasury Note at 101:11 and hold it for exactly one year at which time you sell it.What is your rate of return if your selling price is 101:17?
A) 8.14%
B) 8.75%
C) 9.75%
D) 9.81%
E) 10.47%

Question

Quizplus · Accepted Answer

Purchase Price = [(101 + 11/32)¸ 100] × 10,000 = $10,134.375
Selling Price = [(101 + 17/32)¸ 100] × 10,000 = $10,153.125
Interest = 9 3/4% of 10,000 = $975.00
 $\begin{aligned}
\text { Return } &=\left(P_{\text {end }}-P_{\text {beg }}+\text { Interest }\right) \div P_{\text {beg }} \
&=(10,153.125-10,134.375+975.00) \div 10,134.375 \
&=9.81 \%
\end{aligned}$

You Purchase a 9 3/4s February $10,000 Par Treasury Note