Investments. Determining Bond Yields (Most Important)

Lecture notes, cheat sheets
Free library / Directory / Lecture notes, cheat sheets

Investments. Determining Bond Yields (Most Important)

Lecture notes, cheat sheets

Table of contents (expand)

DETERMINING THE YIELD OF BONDS

Bond yield - this is one of the indicators that determine the characteristics of the financial efficiency of investing in a bond in the current period in the form of an annual compound interest rate, taking into account all bond income.

Total bond yield - the ratio of total income (the sum of coupon and additional income) to the purchase price (in percent).

The bond itself certifies and confirms the fact that the owner of the security has provided monetary resources to the issuer; the issuer's obligation to repay the debt; the right of the investor to receive a certain percentage of the nominal value of the bond for the provided monetary resources.

Interest on bonds remains constant or rarely changes. Interest on bonds is paid on time, agreed in advance, regardless of the profit and financial condition of the issuer before the payment of dividends on shares.

Bondholders have a pre-emptive right to distributable profits and assets of the issuer in the event of its liquidation. Interest is paid within a certain period specified in the terms of the loan. The yield level of a bond depends on the interest rate, purchase price and redemption of the bond.

If a bond is purchased at par and redeemed at par, then the yield on such a bond is equal to the interest (coupon) rate.

A bond bought below par and redeemed at or above par has a yield higher than the coupon rate.

If the purchase price of a bond is higher than par, and redemption occurs at par, then such a bond has a yield level below the coupon rate.

If the income is paid once a year, then the investment return (D) is determined by the formula:

D = P / I,

where P - the amount of interest payments in monetary units; I is the purchase price of the bond.

If the bond is paid several times a year, then The investment return for each payment period can be determined by the formula:

D = (P / I) x (365 / T),

where T is the number of days of the paid period.

Bond income is made up of the following sources: interest (coupon income) that is paid periodically; change in the market value of the bond for the period; income received from the reinvestment of previously received interest (subject to its further reinvestment).

Author: Kuznetsova S.A.

<< Back: Characteristics of bonds

>> Forward: The concept of a securities portfolio

We recommend interesting articles Section Lecture notes, cheat sheets:

▪ Methods of teaching psychology. Lecture notes

▪ Pedagogical psychology. Crib

▪ Informatics and information technologies. Lecture notes

See other articles Section Lecture notes, cheat sheets.

Read and write useful comments on this article.

<< Back

Latest news of science and technology, new electronics:

The existence of an entropy rule for quantum entanglement has been proven 09.05.2024

Quantum mechanics continues to amaze us with its mysterious phenomena and unexpected discoveries. Recently, Bartosz Regula from the RIKEN Center for Quantum Computing and Ludovico Lamy from the University of Amsterdam presented a new discovery that concerns quantum entanglement and its relation to entropy. Quantum entanglement plays an important role in modern quantum information science and technology. However, the complexity of its structure makes understanding and managing it challenging. Regulus and Lamy's discovery shows that quantum entanglement follows an entropy rule similar to that for classical systems. This discovery opens new perspectives in the field of quantum information science and technology, deepening our understanding of quantum entanglement and its connection to thermodynamics. The results of the study indicate the possibility of reversibility of entanglement transformations, which could greatly simplify their use in various quantum technologies. Opening a new rule ... >>

Mini air conditioner Sony Reon Pocket 5 09.05.2024

Summer is a time for relaxation and travel, but often the heat can turn this time into an unbearable torment. Meet a new product from Sony - the Reon Pocket 5 mini-air conditioner, which promises to make summer more comfortable for its users. Sony has introduced a unique device - the Reon Pocket 5 mini-conditioner, which provides body cooling on hot days. With it, users can enjoy coolness anytime, anywhere by simply wearing it around their neck. This mini air conditioner is equipped with automatic adjustment of operating modes, as well as temperature and humidity sensors. Thanks to innovative technologies, Reon Pocket 5 adjusts its operation depending on the user's activity and environmental conditions. Users can easily adjust the temperature using a dedicated mobile app connected via Bluetooth. Additionally, specially designed T-shirts and shorts are available for convenience, to which a mini air conditioner can be attached. The device can oh ... >>

Energy from space for Starship 08.05.2024

Producing solar energy in space is becoming more feasible with the advent of new technologies and the development of space programs. The head of the startup Virtus Solis shared his vision of using SpaceX's Starship to create orbital power plants capable of powering the Earth. Startup Virtus Solis has unveiled an ambitious project to create orbital power plants using SpaceX's Starship. This idea could significantly change the field of solar energy production, making it more accessible and cheaper. The core of the startup's plan is to reduce the cost of launching satellites into space using Starship. This technological breakthrough is expected to make solar energy production in space more competitive with traditional energy sources. Virtual Solis plans to build large photovoltaic panels in orbit, using Starship to deliver the necessary equipment. However, one of the key challenges ... >>

Random news from the Archive

Energy-saving solar-powered clothing 20.12.2023

With increasing temperatures on the planet and environmental challenges, people are faced not only with the need to adapt to a changing climate, but also to ensure biological safety in conditions of elevated temperatures. One innovative approach is the creation of solar-powered smart clothing, which scientists say can function as a personal air conditioner (or heater, if necessary).

Innovative technologies in the field of energy-saving clothing that use solar panels for thermoregulation are opening up new prospects for providing comfort in a changing climate. Systems developed by scientists that can regulate body temperature using solar energy provide an effective and convenient way to maintain biological safety in conditions of elevated temperatures. Further development and industrialization of such technologies could make them accessible to a wider range of consumers, reducing dependence on traditional temperature control methods and promoting resilience to climate change.

To ensure the comfort and safety of the human body, it is important to maintain a certain temperature regime. However, with the planet's rising temperatures and the cold regions at the poles, creating clothing that can regulate temperature has become essential. Scientists have developed an innovative thermoregulation system for clothing that combines an organic photovoltaic module and bidirectional electrocaloric devices to provide cooling or heating.

Both components are not only flexible and suitable for use in clothing, but are also powered by sunlight, eliminating the need for external power sources. The developed clothing is designed to expand the thermal comfort zone from 22° - 28°C to 12,5° - 37,6°C.

The efficiency of the device is sufficient to provide 24 hours of operation after 12 hours of charging in sunlight. In addition, it has a simple structure, compact design and can be integrated into existing clothing.

Perhaps the future will bring universal thermoregulation technologies that are not limited to just power supply, and can even support the operation of electronic devices in special conditions.

With the increase in temperature on the planet, clothing with cooling systems is becoming more and more in demand. Over the summer, reports emerged that global companies were providing cooling vests to their outdoor workers. New technologies also include vests with built-in water pumps, made from breathable fabrics, and even built-in fans.

Other interesting news:

▪ The laser cools the molecules

▪ The new face of Nokia

▪ Babies understand the meaning of work

▪ Rose Transistor and Capacitor

▪ Dawn probe will explore the dwarf planet Ceres

News feed of science and technology, new electronics

Interesting materials of the Free Technical Library:

▪ site section Acoustic systems. Article selection

▪ article Videography of weddings and true human feelings. video art

▪ Article Which bird is the most common in the world? Detailed answer

▪ article Kronotsky Reserve. Nature miracle

▪ article UMZCH cooling fan control device. Encyclopedia of radio electronics and electrical engineering

▪ article Choosing a wire for a transformer by current in the load. Encyclopedia of radio electronics and electrical engineering

Leave your comment on this article:

All languages of this page

Home page | Library | Articles | Website map | Site Reviews