Yield and Yield Spread Measures for Fixed-Rate Bonds
Free CFA Level I lesson in Fixed Income. 12 min read, ~1,814 words.
Periodicity must accompany every rate: an 8% semi-annual bond equivalent yield is not 8% annual. Convert via. Effective annual yield always exceeds the stated rate whenever periodicity is greater than 1, because interest compounds on interest within the year. Current yield ignores capital gain or loss and reinvestment; YTM captures...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- yield measures fixed-rate bonds
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