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Rate is the specified interest rate paid on a financial instrument (such as a bond). The interest is calculated by applying the rate to the face value of the instrument. The yield is calculated by dividing the interest amount received by the price paid for the investment, and the time held. So, if you bought a bond at a discounted price (below the face value), your yield would be higher than the rate. You buy a bond on Jan 1 with a face value of $1,000 and a stated rate of 5% (annual interest payment) at the discounted price of $950. On Dec 31, you receive $50 in interest (1,000 x 5%) which gives you a 5.26% yield (50/950). Or, if you bought a bond for face value close to the coupon date, your yield would be higher than the rate. On July 1, you pay the face value of $1,000 for a bond with a stated rate of 5% and which matures on 12/31. You receive $1,050 , a $50 yield for 6 mos., for a 10% annual yield.
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What bankers do?
Bankers obtain deposits from customers at a low rate and then invest the customers deposit in higher yield debt and equity instruments. The spread (difference) between the two rates is 3-4%
Difference between coupon rate and yield to maturity?
The coupon rate is the actually stated interest rate. This is the rate earned on a NEW issue bond. The yield to maturity takes into consideration the purchase price of a bond bought in the secondary market. For example, if you buy a $1,000 bond for $1100 which matures in 10 years and has a coupon of 5%, your coupon is 5%, but your yield to maturity would be closer to 4% because you paid $1100, but will only get back $1,000 at maturity (losing $100). The "loss" reduces the return.
Difference between rack rate and nett rate?
i can't.
Is the coupon rate or yield rate paid on a bond?
Coupon rate
What is the difference between fix and variable mortgages?
The difference between fixed and variable mortgages are that in a fixed mortgage, the rate can not change. In a variable mortgage, the rate changes with time.
What is the difference between yield and coupon rate?
The difference between the coupon rate and the required return of a bond is dependent upon the type of bond. Junk bonds will have the biggest difference between its return and the coupon rate.
What is the difference between yield to maturity and yield to call?
Yield to maturity means the interest rate for which the present value of the bond's payments equals the price. It's considered as the bond's internal rate of return. Yield to. call is a measure of the yield of a bond, to be held until its call date.
Difference enters bond's coupon interest rate the current yield y bond-holder's required rate of return?
Difference enters bond's coupon interest rate the current yield y bondholder's required rate of return?
What is the difference between a high yield CD and a low yield CD?
I high yield certificate of deposit will help you earn the highest certificate of the deposit rate and it usually requires a high investment also with minimum deposit of $500.
What is the difference between a discount yield and a bond equivalent yield?
Chamika & n
What is the difference between YTD Return vs Yield?
yield vs ytd
Difference between rate constant and specific rate constant?
There is no difference between them they are same rate constant is another name of specific rate constant
What is the difference between crop yield and crop production?
yield is per area, production is total (at least according to FAO)
What is the difference between a merge and a yield - relative to traffic laws?
The Difference between a merge and a yield is, when your merging, you are entering oncoming traffic with out stopping, and yielding s letting the traffic pass you and then going when the coast is clear.
What is the difference between y42 and a 234 wpb pipe fittings?
yield strength
What is the difference between the predicted and actual yield in a chemical reaction?
The actual yield of a reaction product is always less than the yield from the chemical equation. This is because of error.
What bankers do?
Bankers obtain deposits from customers at a low rate and then invest the customers deposit in higher yield debt and equity instruments. The spread (difference) between the two rates is 3-4%
