How to effectively distinguish the two pairs? Thx.
i could be wrong, but i think they are just different terms for the same thing, just different type of investment. Yield is just the convention for quoting fixed income investments. again, I’m not 100% sure but thats how i interpret it.
these will definitely come up in the exam! as to your question: yield = return, so the pairs are the same.
Really? The same? I doubted. For the same set of data, HPR is greater than or less than HPY && EAR is greater than or less than EAY??? I’d have to dig out an exercise I did before, I remember it requires the comparison.
I meant HPR = HPY and EAR = EAY Sorry for the confusion. EAY = EAR = (1+HPY)^(365/t) - 1 That is the relationship between them.
Thanks to clarify it. So EAY&EAR are compounded while HPR&HPY are not? HPR&HPY = Ending Period Value/Beginning Period Value - 1 HPR (for t period) = e ^ Rxt - 1 (R is continuously compounded return)