Page 38 - FINAL CFA SLIDES JUNE 2019 DAY 2
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LOS 7.e: Calculate and interpret the bank discount yield,
holding period yield, effective annual yield, and money Session Unit 2: Discounted Cash Flow Applications
market yield for US Treasury bills and other money
market instruments, p117
The Effective Annual Yield (EAY) is an annualized value, based on a 365-day year, that accounts for compound
interest. It is calculated using the following equation: EAY = (1 + HPY)365 / t – 1
