Fixed income instrument

Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

Fixed income instrument

Postby chandniwadhwani92 » Sun Oct 12, 2014 7:37 am

Difference between equivalent add on yield and effective add on yield. Plz clear dis doubt with example

What is difference between bond equivalent yield and bond annualized yield

Finance Junkie
Posts: 946
Joined: Wed Apr 09, 2014 6:28 am

Fixed income instrument

Postby edupristine » Mon Oct 13, 2014 8:16 am

Difference between Bond Equivalent Yield and Bond Annualized Yield

Bond Equivalent Yield is used in case of those fixed income securities whose payments are not annual, so that they can be compared with securities with annual yields.
If the face value of a bond is Rs 100, BEY = [(100 – Purchase Price)/Purchase Price] * [365/Days to maturity
Both the Bond equivalent yield and the bond annualized yield are annualized returns, but they are calculated differently and used for different purposes.
BEY is used in T- Bill quotes whereas Bond annualized yield is used in other cases. Bond annualized yield is the simple yearly yield taking compounding into consideration.

For effective add on yield and equivalent add on yield, please give me the question where these terms have been used/ asked to calculate.

Return to “CFA Level I”



Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Utmost care has been taken to ensure that there is no copyright violation or infringement in any of our content. Still, in case you feel that there is any copyright violation of any kind please send a mail to and we will rectify it.