Exampleftsame the purchase of a lo-percent-Coupon Treasury bond at aprta of 960 , held one year and sold for 1,020

To determine the yield or return on the Treasury bond, we need to consider both the interest rate and the capital gain or loss from the purchase and sale of the bond.Given information:- The bond has a coupon rate of 5%.- The bond was held for one year.- The bond was sold for 1,000:Annual interest income = 5% × 50Step 2: Calculate the total interest earned over the one-year holding period.Total interest earned = Annual interest income × Number of yearsTotal interest earned = 50Step 3: Calculate the capital gain or loss from the sale of the bond.Capital gain or loss = Sale price - Purchase priceAssuming the purchase price of the bond was 1,020 - 20Step 4: Calculate the total return on the bond.Total return = Total interest earned + Capital gain or lossTotal return = 20 = 70 / 1,020 is 7%.