The Bond-Equivalent Yield Calculation
What is the bond-equivalent yield of a security with a monthly yield of 0.5%?
Answer:
The bond-equivalent yield of a security with a monthly yield of 0.5% is approximately 1%. However, none of the options provided in the question are exactly 1%, so the answer is "None".
Understanding Bond-Equivalent Yield Calculation
Bond-equivalent yield is a measure used to compare the yields of different fixed-income securities. It is calculated by doubling the semi-annual yield of the security. In this case, the monthly yield of the security is stated as 0.5%.
To calculate the bond-equivalent yield, we first need to determine the semi-annual yield. Since there are two semi-annual periods in a year, we need to double the monthly yield to get the semi-annual yield. In this case, 0.5% is the monthly yield.
When we double the monthly yield of 0.5%, we get 1% as the semi-annual yield. Therefore, the bond-equivalent yield of the security with a monthly yield of 0.5% is 1%. As mentioned earlier, none of the options provided match exactly with the calculated bond-equivalent yield of 1%, so the answer is "None".