BDY on Premium Bond? problems, only, head, because, question

ShooterMcCFA

This might be a silly question, but for some reason this popped into my head last night when I was in bed.

Can you do a Bank Discount Yield measure on a premium bond?

D/F x 360/t

I don't think it'd work because the 'D' would be negative.....I've noticed that the only BDY calculation problems have been for non-coupon bearing bonds under a year, so maybe this would never come up.....

evolsteevol

Would never be the case as short term bonds with a term less than one year are usually zero coupon.



Edited 1 time(s). Last edit at Saturday, May 21, 2011 at 01:17PM by Cinderella.

waldziuchna

Interesting question. But in my humble opinion, as its name already suggest, it should apply only to bond with discount. Not bond sold at premium.