What is the return on a bond bought at par that matures in 1 year with a 10% coupon rate?

Question

IBPrep · Accepted Answer

Total return = (Coupon received + (Maturity value - Purchase price)) / Purchase price.

Bought at par ($1,000), 10% coupon = $100, redeemed at $1,000 after 1 year:

($100 + ($1,000 - $1,000)) / $1,000 = $100 / $1,000 = 10%.

Answer