Periodicity and annualised yields (for the CFA Level 1 exam)
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- Опубликовано: 18 окт 2024
- Periodicity and annualised yields (for the CFA Level 1 exam) discusses:
the significance of the periodicity assumtion for computing the annual Yield to Maturity,
the computation of the YTM for zero coupon and strip bonds,
the conversion between annual yields calculated under different periodicity assumptions.
This video explores topics covered in Lesson 2, Learning Module 7 of the Fixed Income section of the 2024 CFA Level 1 Curriculum.
this channel is a gold mine provides so much value made my preparation easy thank you so much for doing this
My melted brain cells from the complicated text on periodicity came back on after watching this.
Nice explanation. Can also do the last question on calculator using iconv function.
nom = 5, c/y = 2 eff = 5.06. C/y = 4, nom = 4.97.
Of course just knowing the relationship can do it quicker but if not in this format it's quite quick.
Yes, absolutely right. You can take this approach as well👍
Thanks a lot. I was stuck in the last part where we have to compare two bonds with different perodicity. I suck in math, so did'nt know how to solve the equation where we have to find APR of the other bond. Now I know thanks to you.
Hi Sir, thanks a lot for these insightful videos! You seem very intelligent and know what you are talking about. I am considering becoming a member but feel a bit conflicted. Your competitor Martin is offering a £4.99 subscription and yours is £8.99, I will have a think about which one will benefit more just before the exam! Another point is that I like how you are changing the video format to a white gridline background, I personally find it a bit hard with the blackboard screen where there are different colours which can sometimes be obscured by the colour of your outfit at times (content is amazing however). If going forward you can make your handwriting a bit bigger/ ensure the colours don't clash that'd be great! Looking foward to watching more of your videos
Going forward, I will be utilizing the white background and only :)
@@letmeexplaincfa Thank you! please can you try to upload all videos for cfa L1 just in time for the Nov exam? I know you have a schedule already but just in case you are going on holiday...
Thank you Sir for this video
I have a doubt.... pls resolve it
I admit the fact that as periodicity rises a lower ytm is enough to produce the same result....but sir what about the reinvestment effect....with increase in periodicity the coupons which I'm receiving early should be reinvested and will increase the overall ytm??
Isn't it true?
Kindly help
Yes, you are right, but here, we assume that coupons are reinvested at a rate equal to the bond’s YTM. Later we relax this assumption.
Got it
Thank you Sir
I don't get why I am not getting this. It looks like very simple maths. Let's say I have a monthly rate of 1.89% and need to find the quarterly and annual. First stage is (1 + 0.0189/12)*12 right? that gives me an annual rate? then I would have 1.0191. To get the quarterly I take the 1 away to get 0.0191 which I would then divide by 4 and then power 4? or take the 0.0191 to power (1/4) and then *4? maybe I'm just tired.
No, once you have the 1.091 (use the actual number on your display without rounding) take this number to the power of 0.25 (1 over 4) now deduct the 1 and multiply the result by 4. You will get a result which slightly higher than 1.89, something like 1.8929…. Which makes sense - with less frequent compounding, you need a higher rate to get to the same result.
notes: 7y*2=14 n
6.4%/2=3.2% pmt
pv = 97.24
fv = 100
cpt i/y
x2
remember neg pv!!!
When I try to compute I/Y it shows erro does anyone knows why?
Have you entered PV and FV with opposite signs?
Insert PV as negative (-) for example PV = -80