Gross redemption yield

 

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Gross redemption yield

See 'redemption yield'.



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Redemption

Redemption

This is the right of the mortgagor to recover mortgaged property on repayment of the loan and any interest due. This legally means that once you as the borrower have finished repaying the mortgage you took out, the property is yours and the lender has no further claim on it. If you pay of the mortgage ahead of schedule you may face a redemption penalty which compensates the lender for loss of interest.


Redemption

Redemption

Repayment of a debt security or preferred stock issue, at or before maturity, at par or at a premium price.


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%.


Redemption fees

Redemption fees

Fees imposed by a mutual fund on shareholders who dispose of shares within a relatively short period after purchase.


Further Suggestions

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


 
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