# Yield comparison

Given 1.3% holding period yield of 90 days loan. Calculate: MMY BEY EAY BDY MMY = HPR x 360 / 90 = 5.2% EAY = (1 + HRP) ^ (360/90) -1 = 5.38% BEY & BDY?

victorh Wrote: ------------------------------------------------------- > Given 1.3% holding period yield of 90 days loan. > Calculate: > > MMY > BEY > EAY > BDY > > MMY = HPR x 360 / 90 = 5.2% > EAY = (1 + HRP) ^ (360/90) -1 = 5.38% > > BEY & BDY? the EAY is with 365, not 360 : )

Doh’ of course … how am I ever going to remember any of these???

victorh Wrote: ------------------------------------------------------- > Doh’ of course … how am I ever going to remember > any of these??? no worries, it is a small difference. it is hard, man. someone should count how may formulas in total appear on CFAI books. maybe after test i will put em together and sell it on web? oh wait, i can’t, LOW BARRIERS TO ENTRY will kill my economic profit : )

well anyway does anyone know how to calc BDY & BEY from HPY? I forgot.

BDY= (face value- issue price / face value) x 360/t HPY= P1 - Po/Po BEY= [(1 + i)^m/2 - 1] x 2

I keep forgetting the denominator for BDY is face value (not Price) and HPY is Price (not face value). Anyone has any trick to remember this one?

The way that I remember the bond equivalent yield is to remember that most bonds pay interest semi-annually. The bond equivalent yield calculates the 6 month equivalent HPR, then doubles it. The same way you enter bonds into the TVM problems for your calculator.

> BEY= [(1 + i)^m/2 - 1] x 2 yup, a BEY is simply the periodic rate doubled