Question: You buy a 3 - year Treasury note with a $ 1 0 0 0 face value, a 1 . 6 2 5 % annual

You buy a 3-year Treasury note with a $1000 face value, a 1.625% annual coupon, and a
yield to maturity of 1.609%. The Treasury note pays coupons semi-annually.
A. What is your 3-year holding period return if you hold the bond until maturity?
Assume you can reinvest any coupons at the semi-annual EPR and the current yield
to maturity of 1.609%.
B. What is your 2-year holding period return if you sell the bond after two years?
Assume you can reinvest any coupons at the semi-annual EPR and the current yield
to maturity of 1.609%.

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