Asked by Alexis Bruxvoort on May 06, 2024
Verified
The yield to maturity reported in the financial pages for Treasury securities
A) is calculated by compounding the semiannual yield.
B) is calculated by doubling the semiannual yield.
C) is also called the bond equivalent yield.
D) is calculated as the yield-to-call for premium bonds.
E) is calculated by doubling the semiannual yield and is also called the bond equivalent yield.
Yield to Maturity
The total return anticipated on a bond if the bond is held until it matures, including all interest payments and the return of principal.
Treasury Securities
Reiteration of U.S. Treasuries, but emphasizing these are safe, low-risk investment products backed by the full faith and credit of the U.S. government, including Treasury bonds, notes, and bills.
Bond Equivalent Yield
Bond yield calculated on an annual percentage rate method. Differs from effective annual yield.
- Understand the primary interest rates within financial markets and their effects.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
E
Explanation :
The yield to maturity for Treasury securities, as reported in financial pages, is often calculated by doubling the semiannual yield, which is a simple way to annualize the rate. This method is also referred to as the bond equivalent yield, which makes it easier to compare with other investments that may compound annually.
Learning Objectives
- Understand the primary interest rates within financial markets and their effects.