# EAY vs BEY

Saw this talked about before but cant find it. As it relates to effective borrowing or lending when using calls and puts… EAY is the rate computed ^ 365/days of loan BEY is EAY^.5 *2 ??? Any help appreciated…ive seen both on practice tests.

PUNT!!! Sorry I couldn’t be of more help.

Schweser Book 3 Page 19 BEY = Rate * Number of Periods in a Year EAR = (1+ Rate) ^ Number of Periods in a Year - 1 I seem to be forgetting stuff - have to go back and look, a lot of tension building up!!

june2009 Wrote: ------------------------------------------------------- > Saw this talked about before but cant find it. > > As it relates to effective borrowing or lending > when using calls and puts… > > EAY is the rate computed ^ 365/days of loan > > BEY is EAY^.5 *2 ??? > > Any help appreciated…ive seen both on practice > tests. Yes. EAY is compounded. So if you have an annual EAY, you uncompound it by ^0.5, as you have done, and then get BEY by multiplying by 2, to get the full year BEY.

awesome…thanks guys

dammit this is like level 1 stuff great!