Investors analysing bonds with various cash flow and maturity profiles seek a standardised yield measure to compare across different choices. Yield measures are usually annualised in order to allow a direct comparison. For capital market securities maturing in more than one year, investors want an annualised and compounded yield-to-maturity.
An annualised and compounded yield on a fixed-rate bond depends on the assumed number of interest periods in the year, which is called the periodicity of the annual rate.
A general formula to convert an annual percentage rate (APR) for m periods per year, denoted APRm , to an annual percentage rate for n periods per year, APRn
