- 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

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**CFA Practice Question**

What is the annual-pay yield of a bond with a 7% yield on a semi-annual-pay basis?

B. 7.000%

C. 7.123%

A. 6.882%

B. 7.000%

C. 7.123%

Correct Answer: C

[(1.07/2)

^{2}-1] = 7.123%###
**User Contributed Comments**
6

User |
Comment |
---|---|

Aimy |
(1+7%/2)square-1=7.123%, exactly |

nchilds |
(1.035)squared |

chamad |
Using BAII ----ICONV----NOM=7 C/Y=2---CPT EFF=7.123% |

bhaynes |
No computation is even needed. Annual pay yield will always be > BEY. Must be answer C. |

2014 |
Rite I hope we such thinking questions ready answer in exam |

johntan1979 |
Best thing to do is to still compute, now that the ICONV takes only a few seconds. What if there are 2 answers more than 7%? |