- Will we always be given 1 year when we are given a problem on the exam involving reinvested coupons and calculating the BEY? Will they ask us “what will be the rate of return in 3 years of reinvested coupons?” All I ever see in examples is for one year and I don’t know it well enough to do anything more than that time length.
also:
- Is the exponent in the BEY formula always 1/2? I thought it was 2*[(EV/BV)^(1/n)-1], where n=number of total semiannual payments. So If it is a 5 year bond with 10 semi-annual payments, the BEY would be:
2*[(Ending Value/Beginning Value)^(1/10)-1]
Is this right?