- 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 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. |