Clarifying the following statement

Dear all,

I am reading AR #54- Introduction to Fixed-Income Valuation and have some difficulties understanding. Let’s consider a hypothetical example of the following:

  • A YTM of 5%, semiannual bond basis

_ Question: I think I read from somewhere that coupon rate/YTM are typically quoted as a per annum basis; so can I say that the term ‘semiannual bond basis’ just merely tell us that the bond pay coupons every 6 months and the rate we see is always based on per annum basis __ ? _

Thank You.



I’m not really sure what you’re asking, but know that yield to maturity is not the same as the coupon rate. These are vastly different creatures.

Thanks Greenman72.

I’m not sure what the phrase - _ YTM 5% bond on a semi-annum basis _ - means?

Does it mean (on a p.a. basis):

  1. 5% OR
  2. 10%

When they say that the YTM is 5%, that’s 5% _ per year _ (BEY).

Interest rates are always quoted as annual rates _ unless they specifically say otherwise _.