Bond equivalent

It’s different in Corporate finance HPY x 365/t So it means that we calculate in differently in exam ? Different calculation in CF section and different in quant section ?

Bond equivalent yield*

Remeber BEY is only the annualized version of HPY To understand BEY better…the explaintion inFixed income books is the best… Most US govt bonds pay semi annual coupon…say 6.3%…so if you want the BEYwould be the coupon payment compunded 6 monthly will be =[(1+0.063)^0.5 -1]*2 =6.2% it is always less than the EAY(6.3%)

tks varundarji

Yes, calculate differently. Anyone know why?

  • varundarji I thought that when a bond yield was mentioned, say 6.3% semiannually, that WAS the BEY…

No but you don’t need to find the BEY to solve those problems