Suppose the market yield on mortgages is in bond equivalent terms

Question

Suppose the market yield on mortgages is 9.0% in bond equivalent terms (BEY, or "coupon equivalent", CEY). What is the effective yield (EAY or EAR)?
a) 0.75%
b) 4.5%
c) 9.0%
d) 9.20%
e) 9.38%

Answer

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