Effective Annual Yield

CFA Level I Fixed Income
#1

How do I convert effective annual yield to Bond equivalent yield? e.g say if effective annual yield is 10% then what is bond equivalent yield?

#2

BEY = 2 × [(1 + EAY)1/2 − 1]

Perhaps more clearly:

  1. Convert the effective annual yield to an effective semiannual yield:

ESAY = (1 + EAY)1/2 – 1

  1. Convert the effective semiannual yield to a bond equivalent yield:

BEY = 2 × ESAY

#3

The BA II has the ICONV function just above the 2 key if you don’t have time for algebra.

#4

Thanks for the reply. Quick follow up question: Why did you convert EAY into semi annual yield?

#5

Thanks for the reply. Quick follow up question. How do I use the ICONV function? After clicking on ICOVN I get the option to enter EFF. What should I do after this?

#6

https://www.google.com/search?q=ti+ba+ii+plus+iconv&oq=ti+ba+ii+plus+ic&aqs=chrome.1.69i57j0l2.14260j0j8&sourceid=chrome&ie=UTF-8

Google is your friend.