hi all, quick question ive been confused with. for EAR/EAY i feel like sometimes you divide the yield by the frequency and sometimes you dont. has anyone else run into this?
e.x. 8% monthly
(1+ (0.08)/12 ) ^ 12 -1 vs.
(1+ (0.08) ) ^ 12 -1
Nobody pays you 8% every month; that’s 72% per year without compounding (and 152% per year with monthly compounding). (If you’re earning that, you’re wasting your time studying for this exam!)
Unless they explicitly state otherwise, interest rates are always – _ always! _ – quoted as annual rates.
mate just use the ICONV button on the BA II.
2nd, 2 (ICONV)
NOM=8
C/Y=12
CPT EFF = 8.3
awesome thanks!