Answer:
5.80%
Explanation:
Effective annual yield is used to calculate a coupon bond return assuming the coupons are reinvested.
With 5.72 % coupon bond, compounded semiannually, you use the following formula to calculate the effective annual yield;
effective annual yield [tex]=(1+\frac{r}{m}) ^{m} -1[/tex]
r = the nominal coupon rate = 5.72%
m = compounding periods in a year = 2
Next, plug in the numbers to the formula;
effective annual yield[tex]=(1+\frac{0.0572}{2} )^{2} -1\\ \\ =1.05802 -1\\ \\ =0.05802[/tex]
= 5.80%
