I thought I got my Bond income right, but my brokerage company's calculator got me totally confused. So here is the problem: I bought a note (US treasury) yesterday: cusip: 912828TN0 (secondary market) Coupon rate: 1% Maturity date: 8/31/19; Settlement date - 5/1/19; YTM at a purchase point: 2.409%; I paid accrued interest: $1.68; my principle: $995.20; Can you tell me, please, how much money should I get back on 8/31/19? :) Thank you so much in advance!
Assuming you bought one $1,000 note, you will get $1,005 at maturity. The $1,000 principal plus the 0.5% (semi-annual 1%) coupon.
You paid for roughly 2 months of accrued interest (
$5 * 2/6 = 1.67) when you bought the note, and get the full 6 months when it settles, so your net interest will be $3.32.
Your net yield is therefore
(1005/996.88 ^ 12/4) - 1 = 2.46% The difference between that and your quote is probably due to a more accurate daycount than just the number of months to maturity.
I bought a note with the Yield to Maturity of 2.409%. Shouldn't I be getting 6 month of this annual rate? and NOT the coupon rate?
No - yield to maturity is your return relative to what you paid for the note, and annualized (in your case, the return is 0.8% or about $8 over 4 months). The interest paid is fixed at 1% of the note amount (or 0.5% twice a year).