Seasoned bond and Semi-annual basis: Difference between pages
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The quotation of a rate of return, or a cost, on the basis of a nominal annual rate for compounding twice per year. | |||
A | |||
<b>Example</b> | |||
'''Q.''' | |||
A rate of return - quoted as an annual effective rate - is 4.04%. | |||
What is this same rate of return quoted on a semi-annual basis? | |||
'''A.''' | |||
The same rate of return quoted on a semi-annual basis is: | |||
(1.0404<sup>(1/2)</sup> -1) x 2 | |||
= 4.00%. | |||
== See also == | == See also == | ||
* [[ | * [[Semi-annual rate]] | ||
* [[ | *[[Nominal annual rate]] | ||
* [[ | *[[Rate of return]] | ||
[[Category:Long_term_funding]] | |||
[[Category:Cash_management]] | |||
Revision as of 14:26, 1 September 2015
The quotation of a rate of return, or a cost, on the basis of a nominal annual rate for compounding twice per year.
Example
Q.
A rate of return - quoted as an annual effective rate - is 4.04%.
What is this same rate of return quoted on a semi-annual basis?
A.
The same rate of return quoted on a semi-annual basis is:
(1.0404(1/2) -1) x 2
= 4.00%.
