 # Redemption cushion Home  Site Map  Add Term  Search  About Us  Contributors # Redemption cushion

The percentage by which the conversion value of a convertible security exceeds the redemption price (strike price).

Redemption cushion

# Preferred equity redemption stock (PERC)

Preferred equity redemption stock (PERC)

Preferred stock that converts automatically into equity at a stated date. A limit is placed on the value of the shares the investor receives.

# 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.

# Serial redemption

Serial redemption

The redemption of a serial bond.

# 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 Ł100 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 Ł100 bond dropped to Ł95, 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

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Redemption date
Redemption
right of redemption
gross redemption yield
Redemption Period
Redemption
Mandatory redemption schedule
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Redemption penalties
Redemption fee
redemption price
Redemption charge
Redemption penalty overhang
Right of redemption
Redemption
Extended redemption penalty
Redemption statement
Redemption price