The periodic yield for a zero coupon bond that matures in 5 years, r, is indicated by the equation Price = [...] .
Answer
Maturity value x (1 + r)-10
This yield is an internal rate of return with semi-annual compounding.
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#reading-7-discounted-cashflows-applications
Question
The periodic yield for a zero coupon bond that matures in 5 years, r, is indicated by the equation Price = [...] .
Answer
?
Tags
#reading-7-discounted-cashflows-applications
Question
The periodic yield for a zero coupon bond that matures in 5 years, r, is indicated by the equation Price = [...] .
Answer
Maturity value x (1 + r)-10
This yield is an internal rate of return with semi-annual compounding.
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Subject 5. Bond Equivalent Yield raight and zero-coupon bonds are conventionally computed based on semi-annual periods, as U.S. bonds typically make two coupon payments per year. For example, a zero-coupon bond with a maturity of five years will mature in 10 6-month periods. <span>The periodic yield for that bond, r, is indicated by the equation Price = Maturity value x (1 + r) -10 . This yield is an internal rate of return with semi-annual compounding. How do we annualize it?
The convention is to double it and call the result the bond's yield to maturit
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