Question
Jim purchases a 10-year 1000 par value bond with annual coupons of 5%. The bond redeems at par value at maturity and is purchased to
Jim purchases a 10-year 1000 par value bond with annual coupons of 5%. The bond redeems at par value at maturity and is purchased to yield an annual rate of 8%. The bond is purchased on January 1st 2000 and pays coupons each January 1st, starting in 2001. On January 1st, 2008, immediately after receiving the coupon payment, Jim sells the bond to Gary for 983.48.
After the sale of the bond to Gary, Jim realizes an overall annual yield rate of j% on the bond during his ownership.
After the purchase of the bond from Jim, Gary holds the bond until maturity and realizes an overall annual yield rate of i% on the bond during his ownership.
Find i + j.
Give your answer as a percentage rounded to one decimal place.
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