what is this question trying to ask please help
What is the YTM expressed on semiannual bond equivalent yield (ie. periodicity = 2)?
Using calc
EFF = 7.75 (For annual pay YTM = EAR as periodicity = 1)
C/Y = 2
NOM CPT = 7.605
or
[(1 + 0775)^(1/2) - 1 ] x 2 = 0.07605 = 7.605%
am not understanding the seminannual part where have they asked to find semiannual?
It is a problem wirh defintions in the syllabus. Years ago the syllabus changed but they have not changed the phrasing in the questions.
“Bond Equivalent Yield” BEY when referencing coupon paying bonds used to refer to a nominal quotation method using a periodocity of 2. This is the quotation convention of US and UK government bonds.
The syllabus changed and the precise defintions in the syllabus are now.
“semiannual bond basis yield, or semiannual bond equivalent yield.” (fixed incoem LM7 section 2)
BUt there are still many questions in the CFA question bank that uses “bond equivalent yield” with reference to coupon paying bonds and they mean a nominal quote with periodicity =2
The syllabus uses “bond equivalent yield” in relation money market instruments as a 365 day add-on-rate.
So I think there is a confussion between the syllabus and the question bank.
I would suggest that with reference to coupon paying bonds interpret BEY as a nominal quote with periodicity =2
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