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Annual yield

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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October 29, 2014 at 4:36 pm #206605
stacie395
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If 6.165% is the yield for 6 months, how do we determine the annual yield…?…straight away multiply with 2…?
October 29, 2014 at 8:48 pm #206646
John Moffat
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If ‘r’ is the 6 monthly rate, and ‘R’ is the yearly rate, then (1+R) = (1+r)^2
So in this example, the yearly rate = R = 1.06165^2 – 1
(For more examples, watch the Paper F2 lecture on Interest.)
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