- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 7. Yield and Yield Spread Measures for Fixed-Rate Bonds
- Subject 1. Periodicity and Annualized Yields
CFA Practice Question
What is the bond equivalent yield of a 7% annual-pay bond for semi-annual compounding?
B. 7.000%
C. 7.123%
A. 6.882%
B. 7.000%
C. 7.123%
Correct Answer: A
2[(1.07)0.5 -1] = 6.8826%
User Contributed Comments 15
| User | Comment |
|---|---|
| danlan | Must be <7%, so A |
| Winner | how can you do this using a BAII without using this formula. |
| ramtor | use iconv funtion |
| sp24 | This video shows how do do use this function: http://movies.atomiclearning.com/k12/ti_ba2/ Take a look at C. 2.! |
| tschakawaka | from annual to semi-annual => interest has to get smaller due to compound interest effect - no calculation needed |
| chamad | Using BAII ----ICONV----EFF=7 C/Y=2---CPT NOM=6.88 |
| eb2568 | awesome chamad, thanks for the tip!! |
| devourb | what about hp12c? |
| moneyguy | Thanks, chamad!! Pretty darn easy now! |
| 2014 | Thanks Chamad |
| johntan1979 | Yeah, so many formulas to remember, ICONV function really helps! THANK YOU! |
| jonan203 | hp12c: 1.07 <enter> .5 <y^x> 1 <minus> 2 <times> |
| jrojasut09 | ICONV function is the way to go thanks @chamad |
| khalifa92 | better understand both ways formula and calculator |
| UcheSam | There is inverse relationship between BEY and periodicity. |