The bond-equivalent yield for a semi-annual pay bond is most likely: A. equal to double the semi-annual yield to maturity. B. equal to the semi-annual yield to maturity The answer is A. However, “YTM is an annualized internal rate of return” aoccording to Notes Vol 5, page 106. So what does “semi-annual YTM” really mean?

It’s basically the YTM for a semi-annual bond I think. So if we have an annual pay bond with YTM = 8%, the semi-annual yield would be ((1.08)^0.5)-1 = 3.92%. The BEY is 3.92% * 2 = 7.85%. I think this is about right although i’m a little ropey myself…