The text books don’t have any problems pertaining to BEY and I just want to work with the formulas in order to gain a better understanding. The textbook really only has about 3 sentences on this topic.
I’m not sure how much there is to say about this. The BEY is just double the semiannual yield, the key point being that it ignores the effect of compounding. For example, if the semiannual yield is 4%, the BEY is 0.04*2=0.08 (no compounding), whereas a more exact approach would be to include the effect of compounding, (1+0.04)^2-1=0.0816. Think of the BEY as a quick shortcut – just double the semiannual yield.
If you haven’t covered Fixed Income yet, make a note of the BEY and revisit this later. It will make a lot more sense after you have familiarised yourself with bonds.
Thank you for your help. I really appreciate it.