Gross redemption yield

 

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Gross redemption yield

See 'redemption yield'.



Similar Matches

Overhanging redemption penalty

Overhanging redemption penalty

An early redemption charge that lasts beyond the benefit period is referred to as an extended or overhanging redemption penalty. These should be avoided where possible.


Redemption date

Redemption date

The date on which a bond matures or is redeemed.


Redemption price

Redemption price

The price at which a bond or preferred stock can be redeemed by the issuer.


Redemption yield

Redemption yield

Yield calculations on bonds aim to show the return on a gilt or bond as a percentage of either its nominal value or its current price. There are three types of yield calculation that are commonly used:Nominal YieldThis is calculated by dividing the annual income on the bond by its nominal or 'par' value. So the nominal yield on a 100 bond which pays 5% interest per year is 5/100 x 100 = 5%.Current or 'Running Yield'This is calculated by dividing the annual income on the bond by its current market price. So if the market price of the 100 bond dropped to 95, the current yield on the bond at that time would be 5/95 x 100 = 5.36%. Note that as the market price of a bond drops, its yield goes up.Redemption Yield'The Redemption Yield shows what the total return on a bond would be if held to its maturity date. It reflects not only the interest payments a bondholder will receive, but also the gain/loss he will make when it matures. The income element is the same 'current yield' calculation performed above. The gain/loss element is calculated by taking the difference between the current market price and the nominal value of the bond (e.g. in our example 100 - 95 = 5), dividing it by the number of years til maturity (assume 5 years for simplicity, so 5/5 = 1) and then dividing that figure by the current price of the bond (1/95 x 100 = 1.05%) The yield to redemption is the sum of the current yield (5.36%) and the capital yield (1.05%) = 6.41%.


Extended redemption penalty

Extended redemption penalty

This is where the redemption penalty continues beyond a fixed or capped rate period, effectively tying you in to the much higher variable rate for a period of time after the fixed or capped period. As a result you get stuck paying an uncompetitive rate that eats into the gains you may have made from having the fixed rate or capped ratein the first place.


Further Suggestions

redemption date
Redemption cushion
Redemption price
Redemption Period
Redemption fee
Mandatory redemption schedule
Redemption
Redemption penalty overhang
right of redemption
Redemption
Redemption charge
Redemption statement
Redemption penalties
Preferred equity redemption stock (PERC)
Right of redemption
Redemption
redemption fees
Serial redemption
redemption


 
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