liangfeng

Paraguay Wrote:
-------------------------------------------------------
> FinNinja Wrote:
> --------------------------------------------------
> -----
> > I got 4.393% but that's just based on CF
> analysis
> >
> > 25.25 + 25 - 5 = 45.25 / 1030 = 4.393%
> >
> > do we have to adjust for BEY? I know this is
> how
> > they are generally quoted, but when calculating
> > total return wouldn't the actual total return
> be
> > more accurate?
>
> A lot of the Schweser questions used to ask for
> BEY.
>
> This used to be a very large portion of the fixed
> income section so a lot of the Schweser material
> leaves this as legacy.
>
> It is literally a single blue box now.


Paraguay is actually correct! It was a CFAI question.
However, what I am struggling with is why is the BEY the total return? I thought the EAR is the total return which would be 4.39 ?
In SS9, p.49 Q8, Schweser asks for the "total effective return" which in their guideline answer is the effective annual return (EAR).

Any explanations gentlemen?