Yield vs Interest rates

[Ankit Sharma]

Hi Guys,
Right now I am facing problem in understanding the different ways to find out the annual returns , sometimes question simlpy multiply with 2 to get the annual yield for semi-annual bond , sometimes to find the rates it does (1.02)^2 , I am confuse when to use what, sometimes interest rates are compounded and sometimes not, this lead to me going for incorrect answer even if I my way to calculation is correct.
Does anyone has note ( can give me link) to help me in understading When to use what method

 

[S2000magician]

Multiplying the semiannual (effective) yield by 2 gives you bond equivalent yield (BEY): this is the common convention for quoting bond yields.
Compounding the semiannual (effective) yield for 2 periods gives you effective annual yield (EAY); this is the common convention for comparing investments of all types.

 

[Ankit Sharma]

Thanks!

 

[S2000magician]

You’re welcome.