• 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5

Treasury note rate of return?

I am new to Treasury's but I am looking to purchase a one year Treasury Note on the secondary market through Fidelity.  But when I search Treasury Notes on Fidelity I see the coupon rate at 1.125, the yield at 2.789 and the yield to worst and the yield to maturity at 2.754.  I think I would possibly receive the YTM at 2.754 but unsure how the coupon rate at 1.125 figures into the picture?

Yes, you would receive a yield to maturity of 2.754%.  You purchase the note at a discount (at 98.3 or so) and when the note matures, you are paid off at the full value.  For one note, you would pay $983 and get back $1000 after a year.  In addition, you would receive $11.25 worth of interest (from the coupon).  In total, you make about $27 from your initial investment of $983.  I think that will be close to 2.754%.
The other yield you mention, the 2.789% is the yield for the highest bid value.  It is higher than the other yield because it is computed with a smaller purchase price.

Forum Jump:

Users browsing this thread: 1 Guest(s)