For a debt security that pays interest semiannually the yield-to-maturity formula needs to be modified with both the figure for annual interest income and the yield multiplied by 2.

Question

Quizplus · Accepted Answer

The yield-to-maturity formula for a debt security that pays interest semiannually indeed accounts for the semiannual payments, but it does so by dividing the annual interest rate by 2 (to get the per-period rate) and multiplying the number of years to maturity by 2 (to get the total number of periods), rather than multiplying the annual interest income and the yield by 2.

For a Debt Security That Pays Interest Semiannually the Yield-To-Maturity