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mapleleafs
Topic Author
Posts: 405
Joined: August 24th, 2005, 2:13 pm

Yield Calculation

October 9th, 2007, 12:11 am

Is semiannually compounding yield lower than annually compounding yield in any cases?
 
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amit7ul
Posts: 571
Joined: December 7th, 2004, 8:36 am

Yield Calculation

October 9th, 2007, 6:48 am

your question is hazy, but anyways.for the same annual rate, effective interest rate increases with increase in times the interest gets compounded.example for 5% annual rate annual compounding =>effective int rate = (1.05)-1=0.05 or 5%andsemi-annual compounding => effective int rate = (1.025)^2-1=0.050625 or 5.0625%
 
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cemil
Posts: 221
Joined: September 16th, 2005, 7:44 am

Yield Calculation

October 9th, 2007, 7:29 am

The formula is:(1+semiannual_rate/2)^2-1=annual_rate
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