Chapter 4: Net Present Value - Wharton Finance

Since the stated annual interest rate is compounded semiannually, simply divide this rate by two in order to calculate the semiannual interest rate. ... Calculate the yield, expressed as an effective annual yield, by compounding the semiannual interest rate over two periods. Yield = (1+r)2 – 1 = (1.06)2 – 1 = 0.1236. The yield is 0.1236. ................
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