Bond-equivalent yield, Financial Management

Normally, the cash flows from mortgage backed and assets-backed securities are obtained on monthly basis. Therefore, the yield calculated would be on a monthly basis. The monthly yield can be annualized as follows:

         Semiannual effective yield = (1 + monthly yield) 6 - 1                              

         Annual cash flow yield = 2 [(1 + monthly yield) 6 - 1]     

Posted Date: 9/10/2012 2:00:32 AM | Location : United States

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