With which formula do you annualize the HPY of a T-Bill on a 365 basis
Answer
The effective annual yield
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#reading-7-discounted-cashflows-applications
Question
With which formula do you annualize the HPY of a T-Bill on a 365 basis
Answer
?
Tags
#reading-7-discounted-cashflows-applications
Question
With which formula do you annualize the HPY of a T-Bill on a 365 basis
Answer
The effective annual yield
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Subject 4. Different Yield Measures of a U.S. Treasury Bill #13;
Since a pure discount instrument (e.g., a T-bill) makes no interest payment, its HPY is (P 1 - P 0 )/P 0 .
Note that HPY is computed on the basis of purchase price, not face value. It is not an annualized yield.
<span>The effective annual yield is the annualized HPY on the basis of a 365-day year. It incorporates the effect of compounding interest.
Money market yield (also known as CD equivalent yield) is the annualized HPY on the basis of
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