Scribd
Upload
4 views1 page

Fixed Income Yield Analysis Techniques

This document discusses methods for measuring yield on fixed income securities. It covers computing effective annual yield by annualizing periodic interest rates. It also introduces common yield measures, including current yield which is the annual coupon interest divided by price, and yield to maturity which for zero-coupon bonds is the inverse of the price compounded over the bond's life.

Uploaded by

Matt Courchaine
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
4 views1 page

Fixed Income Yield Analysis Techniques

This document discusses methods for measuring yield on fixed income securities. It covers computing effective annual yield by annualizing periodic interest rates. It also introduces common yield measures, including current yield which is the annual coupon interest divided by price, and yield to maturity which for zero-coupon bonds is the inverse of the price compounded over the bond's life.

Uploaded by

Matt Courchaine
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

BUS 424: Fixed Income Security Analysis

CHAPTER 3: MEASURING YIELD


I.

Computing the Yield or IRR on any Investment


A. Annualizing Yield

Effective annual yield =(1+ period interest rate)m1


1
m

Periodic interest rate=(1+effective annual yield ) 1


II.

Conventional Yield Measures


A. Current Yield

CY =

annual dollar coupon interest


price

B. Yield to maturity
1. For zero-coupon bond

[ ]

M n
y=
1
P

You might also like