The following adjustments must be made when interest is paid semi-annually versus annually except:
A)Annual interest rate divided by 2
B)Total number of years divided by 2
C)Annual yield to maturity divided by 2
D)Annual coupon payment divided by 2

Question

Quizplus · Accepted Answer

When interest is paid semi-annually, the number of years remains the same as in the annual case. However, the other options require division by 2 to reflect the semi-annual payments. This includes dividing the annual interest rate by 2, the annual yield to maturity by 2, and the annual coupon payment by 2.

The Following Adjustments Must Be Made When Interest Is Paid