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In 2012, Jim Ayers bought five LTV 6s28 bonds for which he paid 88. Three years...

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Finance

In 2012, Jim Ayers bought five LTV 6s28 bonds for which he paid88. Three years later, he sold the bonds at 84 and bought fiveSouthern Electric 9 1/2 s 30 bonds at 95. Did he increase ordecrease the original rate of yield to maturity, and, if so, by howmuch? Assume the par value of each bond is $1,000. If requiredround annual discount amortization to the nearest cent. Roundyields to maturity to one decimal place. Enter your answer as apositive value.

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3.5 Ratings (454 Votes)
First we need to calculate YTM for both the bonds Jim purchased 6s28 purchased at 88 in 2012 and sold it in 2015 at 84 Face value 1000 Price of bond when purchased in 2012 88 value of bond    See Answer
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In 2012, Jim Ayers bought five LTV 6s28 bonds for which he paid88. Three years later, he sold the bonds at 84 and bought fiveSouthern Electric 9 1/2 s 30 bonds at 95. Did he increase ordecrease the original rate of yield to maturity, and, if so, by howmuch? Assume the par value of each bond is $1,000. If requiredround annual discount amortization to the nearest cent. Roundyields to maturity to one decimal place. Enter your answer as apositive value.

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