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Determining the current level over the bond life

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Reference no: EM132497636

A US Government bond has 15 years remaining to maturity, pays annual coupons (yesterday) of $90, and has a face value of $1,000. The current price of the bond is $923.94 to yield 10%. Calculate your return if you buy the bond today, hold it for one year and sell it after the next coupon. What percentage of your return will be attributable to coupon interest (as opposed to capital gain)? (Assume that yields are expected to remain constant at the current level over the bond's life.)

Reference no: EM132497636

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