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What Is Effective Annual Yield?

By Kristi WaterworthUpdated Mar 25, 2025 at 1:13 PM

Key Points

  • Effective annual yield calculates total bond returns, factoring in reinvested interest.
  • Bond equivalent yield suits zero-coupon bonds, estimating returns versus long-term bonds.
  • Understanding these yields helps investors assess potential gains and choose suitable bonds.

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