CFA Practice Question

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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?

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%?
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