1.Calculate the effective annual yield of a bond that is currently selling at $98,039 and has 2...
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Question:
1.Calculate the effective annual yield of a bond that is currently selling at $98,039 and has 2 months to maturity.
yield to maturity, YTM, can be calculated as ($100,000 - $98,039) / $98,039 = 0.02. Effective annual yield, EAY, is (1 + YTM)6 - 1 = 12.618%
isnsomeone please explain why the answer for EAY is to the power of 6. THANKS
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