Question

What is the annual nominal rate compounded daily for a bond that has an annual yield of 3.9%? The annual nominal rate is %. (
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Answer #1

Effective Annual Yield = 3.90%

Daily Interest Rate = (1 + Effective Annual Yield)^(1/365) - 1
Daily Interest Rate = (1 + 0.0390)^(1/365) - 1
Daily Interest Rate = 1.000105 - 1
Daily Interest Rate = 0.000105 or 0.0105%

Annual Nominal Rate = 365 * Daily Interest Rate
Annual Nominal Rate = 365 * 0.0105%
Annual Nominal Rate = 3.833%

The annual nominal rate is 3.833%

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