Question about calculating BEY/Semi-annual yield of Bonds

@watchtower‌ i wasn’t referring to your question at all. And why would I even think of saying there are errors in the curriculum?!! I just meant there have been a few changes in the LOS’s between 2013 and ’14. So it would be better to stick to the latest curriculum i.e. 2014. That’s all.

@watchtower‌ alright so to answer your actual question, the first mistake that you are making is that we have to calculate bond equivalent yield which is based on a 365 days per yr basis. Here the rate is quoted for a bank deposit which is based on 360 days per yr.

So 1.5 × (365/360) = 1.5208%

Now calculate the add on yield for 100 days

1.5 × (100/360) = 0.4167%

Effective annual yield = 1.004167^(365/100) -1 = 1.5294%

Therefore, effective semiannual yield = 1.015294 ^ 1/2 -1 = 0.7618%

Bond equivalent yield = 0.7618% × 2 = 1.5236%

Hope this will clear the confusion. And about the curriculum change, personally I just stick to the latest 2014. So can’t help with that.

@watchtower‌ ok i have a question. Why are you following the 2013 curriculum? There have been quite a few changes especially in the Fixed Income Securities section between then and now. Looking at both will just confuse you.