标题: BEY - Quant/Bond vs Corp Fin [打印本页] 作者: spartan1 时间: 2011-7-11 19:43 标题: BEY - Quant/Bond vs Corp Fin
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Boyle Inc just purchased a banker's acceptance for $25,400. It will mature in 80 days for $26,500. The discount-basis yeild and the bond equivalent yield for this security are closest to:
Discount-basis Bond equivalent
A. 18.7% 18.7%
B. 18.7% 19.8%
C. 4.2% 19.8%
ANS:
B.
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The answer is correct using the following formula for BEY: HPY x (365/days). This formula is for calculating yields on short-term investments (as stated in the Corp Fin readings).
However, using the old Quant/Bond formula by first calculating the semiannaul EAY and multiplying it by 2 gives 20.3%. The difference between the two answers is significant.
Are we supposed to use the previous formula only when asked to calculate yields on short-term investments and the use the latter for the rest? Why can't the Quant/Bond BEY formula be used to calculate the yields on short term investments?作者: thisisbrianly 时间: 2011-7-11 19:43
> Are we supposed to use the previous formula only
> when asked to calculate yields on short-term
> investments and the use the latter for the rest?
Yes.
> Why can't the Quant/Bond BEY formula be used to
> calculate the yields on short term investments?
I really don't know.作者: Flok 时间: 2011-7-11 19:43
I tough the multiplication was HPY x 360/days, how did you know you had to use 365... first time I see 365 instead of 360.
What did you do to get the BEY... did you do (1+ DBY)^.5-1x2???作者: Ionutzakis 时间: 2011-7-11 19:43
