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Mr. Weber purchases a $1000 bond, that pays interest at j_{4} = 10.5% and is redeemable at 97 in 11 years. He bought the bond
Mr. Weber purchases a $1000 bond, that pays interest at j_{4} = 10.5% and is redeemable at 97 in 11 years. He bought the bond at a price to yield j_{4} = 8.75% if held until maturity. After 5 years, he sells the bond to another investor who will yield j_{4} = 6.85% if held until maturity. Approximate Mr. Weber's yield on his investment over the 5-year period, using the method of averages?
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