Answer :
5.52% is the bond-equivalent yield.
Bond Equivalent Yield = 2 × [ (1+ Annual yield to maturity ) ^ (1/2) -1]×100
= 2* [ ( 1+5.6%) ^ (1/2) -1]×100
= 5.52%
A bond is a debt protection, just like an IOU. debtors difficulty bonds to elevate cash from buyers inclined to lend them cash for a sure amount of time. when you purchase a bond, you are lending to the issuer, which may be a central authority, municipality, or enterprise.
In easy terms, a bond is a mortgage from an investor to a borrower together with an agency or authorities. The borrower uses the cash to fund its operations, and the investor gets interested in the investment. The market fee of a bond can exchange over the years.
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