Bond performance

The interest of the government bond is calculated and paid quarterly. To establish what the quarterly interest rate is, you divide the interest rate of 3% by 4, which is 0.75%. This is paid each quarter and is not reinvested in the bond.

Quarter 1 100,000 x 0.75% = $750

Quarter 2 100,000 x 0.75% = $750

Quarter 3 100,000 x 0.75% = $750

Quarter 4 100,000 x 0.75% = $750

               Total Interest    $3,000

The total return is $3,000 in interest on your $100,000.

To express this as a percentage it is $3,000 divided by $100,000. The return for the government bond is 3% (0.03).