Periodicity and annualised yields (for the CFA Level 1 exam)

[@Smartphone22-b7g]

My melted brain cells from the complicated text on periodicity came back on after watching this.

[@amritaagarwal1872]

I found your videos when I was searching for a quick answer on Google on how the periodicity conversion is done. This was 2 weeks before my CFA Level 1 exam - I'll be taking it this Monday. Since finding this video, I subscribed to your channel and studied my entire Fixed Income module using the FI module playlist, and various other weak topics in Quant and Econ. I also ended up changing my calculator to the AOS mode - had no clue before watching your videos. If I do pass, credit goes to you!! My sincere thanks, I truly appreciate all the work and simplifying complex concepts, providing these videos at such an affordable cost. Looking forward to learning through your videos for L2 as well.

[@letmeexplaincfa]

Dear Amrita. Thank you so much for you support and this lovely comment! I wish you all the best on your exam tomorrow and I sincerely hope to see you back for level 2!

[@ShreyaGupta-c4r]

this channel is a gold mine provides so much value made my preparation easy thank you so much for doing this

[@MahrukhMughal-t3c]

Thank You Sir, You have explained very well, Guys! Honest Personal suggestion if you're seriously aiming to study for CFA Level 1 and follow the CFA curriculum thoroughly, then this is the Best channel, The membership is very affordable and all the lectures are structured step-by-step according to the CFA Level 1 learning modules. It has been incredibly helpful in my preparation, and I believe it can support you too!

[@Existence_Predicate]

Nice explanation. Can also do the last question on calculator using iconv function. nom = 5, c/y = 2 eff = 5.06. C/y = 4, nom = 4.97. Of course just knowing the relationship can do it quicker but if not in this format it's quite quick.

[@letmeexplaincfa]

Yes, absolutely right. You can take this approach as well👍

[@vipkoli95]

Thanks a lot. I was stuck in the last part where we have to compare two bonds with different perodicity. I suck in math, so did'nt know how to solve the equation where we have to find APR of the other bond. Now I know thanks to you.

[@nileshpawar1037]

Just for knowledge we can change the periodicity for TVM in the calculator(BA II Plus) using 2nd and I/Y and then down arrow. P/Y= no of payments per year and C/Y = Number of compounding per year.

[@letmeexplaincfa]

Yes, absolutely correct. I don't encourage you to make that change however, as under exam conditions you may forget to go back to the default settings.

[@nileshpawar1037]

@letmeexplaincfa Yes, I figured that the hard way this morning when I was solving question and not getting answer 😅.

[@letmeexplaincfa]

@@nileshpawar1037 :)

[@harveymack2912]

Can't get my head around the textbook answer. The question is: bond pays quarterly coupon of 3.25%, 3 years to maturity and currently trading at 97.28. The semiannual bond basis yield is closes to.....

[@Becky-q3q]

Hi Sir, thanks a lot for these insightful videos! You seem very intelligent and know what you are talking about. I am considering becoming a member but feel a bit conflicted. Your competitor Martin is offering a £4.99 subscription and yours is £8.99, I will have a think about which one will benefit more just before the exam! Another point is that I like how you are changing the video format to a white gridline background, I personally find it a bit hard with the blackboard screen where there are different colours which can sometimes be obscured by the colour of your outfit at times (content is amazing however). If going forward you can make your handwriting a bit bigger/ ensure the colours don't clash that'd be great! Looking foward to watching more of your videos

[@letmeexplaincfa]

Going forward, I will be utilizing the white background and only :)

[@Becky-q3q]

@@letmeexplaincfa Thank you! please can you try to upload all videos for cfa L1 just in time for the Nov exam? I know you have a schedule already but just in case you are going on holiday...

[@θατοκρατήσωμανιάτικο]

I don't get why I am not getting this. It looks like very simple maths. Let's say I have a monthly rate of 1.89% and need to find the quarterly and annual. First stage is (1 + 0.0189/12)*12 right? that gives me an annual rate? then I would have 1.0191. To get the quarterly I take the 1 away to get 0.0191 which I would then divide by 4 and then power 4? or take the 0.0191 to power (1/4) and then *4? maybe I'm just tired.

[@letmeexplaincfa]

No, once you have the 1.091 (use the actual number on your display without rounding) take this number to the power of 0.25 (1 over 4) now deduct the 1 and multiply the result by 4. You will get a result which slightly higher than 1.89, something like 1.8929…. Which makes sense - with less frequent compounding, you need a higher rate to get to the same result.

[@somyadhoundiyal6372]

Thank you Sir for this video I have a doubt.... pls resolve it I admit the fact that as periodicity rises a lower ytm is enough to produce the same result....but sir what about the reinvestment effect....with increase in periodicity the coupons which I'm receiving early should be reinvested and will increase the overall ytm?? Isn't it true? Kindly help

[@letmeexplaincfa]

Yes, you are right, but here, we assume that coupons are reinvested at a rate equal to the bond’s YTM. Later we relax this assumption.

[@somyadhoundiyal6372]

Got it Thank you Sir

[@noufalsaadi8878]

When I try to compute I/Y it shows erro does anyone knows why?

[@letmeexplaincfa]

Have you entered PV and FV with opposite signs?

[@vipkoli95]

Insert PV as negative (-) for example PV = -80

[@Verlain28]

notes: 7y*2=14 n 6.4%/2=3.2% pmt pv = 97.24 fv = 100 cpt i/y x2

[@Verlain28]

remember neg pv!!!