Effective annual yield to maturity
[DOC File]Chapter 10
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What is the effective annual yield (EAY) if the semiannual periodic interest rate is 4.3%? Periodic rate = r = 4.30%; m = 2. EAY = (1 + r)m – 1 = (1.0430)2 – 1 = 8.7849%. What is the yield to maturity of a bond? The YTM is the discount rate that equates the cash flows to the price. It is the “promised yield”from holding the bond . IF
Effective Yield Definition
Effective annual yield to maturity = (1.0426)2 – 1 = 0.0870 = 8.70% b. Since the bond is selling at par, the yield to maturity on a semi-annual basis is the same as the semi-annual coupon rate, i.e., 4%. The bond equivalent yield to maturity is 8%.
[DOCX File]Measuring Yield
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Effective annual yield to maturity = (1.0426)2 – 1 = 0.0870 = 8.70%. b. Since the bond is selling at par, the yield to maturity on a semiannual basis is the same as the semiannual coupon rate, i.e., 4%. The bond equivalent yield to maturity is 8%. Effective annual yield to maturity …
[DOC File]Investments – FINE 7110
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The bond’s yield to maturity will increase from 8.5%, effective annual interest (EAR) to 8.8%, EAR, when the perceived default risk increases. 6 month interest rate equivalent to 8.5% EAR = (1.085)1/2 – 1 = .04163 6 month interest rate equivalent to 8.8% EAR = (1.088)1/2 – 1 = .04307
[DOC File]Investments – FINE 7110
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Effective annual yield to maturity = (1.0426)2 – 1 = 0.0870 = 8.70%. b. Since the bond is selling at par, the yield to maturity on a semi-annual basis is the same as the semi-annual coupon rate, i.e., 4%. The bond equivalent yield to maturity is 8%.
[DOC File]Soln Ch 13 Bond prices
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Effective annual yield to maturity = (1.0426)2 – 1 = .0870 = 8.70%. b. Since the bond is selling at par, the yield to maturity on a semi-annual basis is the same as the semi-annual coupon, 4%. The bond equivalent yield to maturity is 8%. Effective annual yield to maturity = (1.04)2 – 1 = .0816 = 8.16%
[DOC File]Soln Ch 13 Bond prices - Home - York University
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Effective annual yield to maturity = (1.0426)2 – 1 = 0.0870 = 8.70%. Since the bond is selling at par, the yield to maturity on a semi-annual basis is the same as the semi-annual coupon, 4%. The bond equivalent yield to maturity is 8%. Effective annual yield to maturity = (1.04)2 – 1 = 0.0816 = 8.16%
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