- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 8. Yield and Yield Spread Measures for Floating-Rate Instruments
- Subject 2. Yield Measures for Money Market Instruments
CFA Practice Question
Given a 30-day horizon, a holding period yield of 0.33445% produces an equivalent annual yield of ______.
B. 4.0134%
C. 3.9016%
A. 4.1460%
B. 4.0134%
C. 3.9016%
Correct Answer: A
EAY = (1.0033445)365/30 - 1 = 4.1460%
HPY -> EAY
EAY = (1.0033445)365/30 - 1 = 4.1460%
User Contributed Comments 12
| User | Comment |
|---|---|
| wuyi | why use 365 days? not 360 days? |
| raychow | what is equivalent annual yield? |
| Indira | because by definition EAR is annualized on the basis of 365 days, not 360. |
| Indira | "equivalent" means matched to HPY |
| Winner | on the BA II how do you do the funtion to the power or 365/30? For example what are the key stroke for this problem, (1.0033445)^365/30 |
| pierreE14 | hi winner key in 1.0033445 y^x (365/30) = |
| BandB | why is it the EAY instead of the Money Market Yield? Thanks. |
| reganbaha | Because all of the answers to choose from are stated as EAY. |
| loisliu88 | this question is a bit ambiguous. first I thought it asked for a Bond Equivalent Annual Yield. because there are two ways to annulize a periodic rate. one is EAY and another is Bond Equivalent yield. |
| shinnie | so...equivalent annual yield = effective annual yield? |
| obuyajosh | Another way on BA II plus: => 2nd ICONV => 0.33445* (360/30) press enter => down arrow twice to C/Y => 360/30 press enter =>press up arrow to EFF and press CPT to give 4.1599 |
| MathLoser | Don't you even check? It's 365, not 360. |