- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 44. Introduction to Fixed-Income Valuation
- Subject 6. Yield Measures for Floating-Rate Notes and Money Market Instruments
CFA Practice Question
Given a 30-day horizon, a money market yield of 4.0134% produces a(n) ______.
A. holding period yield of 0.3554%
B. holding period yield of 0.4354%
C. effective annual yield of 4.1460%
Explanation: MMY -> HPY: HPY = 0.040134 / (360/30) = 0.33445%
HPY -> EAY: EAY = (1.0033445)365/30 = 4.1460%
HPY -> EAY: EAY = (1.0033445)365/30 = 4.1460%
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan | Use 365/30 instead of 12 |
| Xocrevilo | Well worth remembering the transition: MMY->HPY->EAY |
| aha66 | A) is technically correct, right? |