What is the return of redemption?
Redemption yield is a reasonable return that someone buys a bond today will receive if they hold the bond until its maturity. The picture will include both interest payments on the bond and all the profit or loss resulting from the difference between the nominal value of the bond and the amount someone pays for it. Redemption yield is also known as maturity yield. It includes the sale of a bond to the investor and then a return of cash after a fixed period. Usually there will be provisions on the implementation of interest payments either during the period, after maturity, or both. Bonds can be sold among investors before they ripen, and the price usually differs depending on how long the bond has left to run.
The redemption yield will often be compared to the degree of coupon. This is the rate for which the interest is paid on the bond compared to the nominal value. If the coupon rate is higher in terms of redemption, it is described as a bonus sale; If lower, it is sold for a discount; and if both of them are the same, they are soldon par.
Two elements are redemption yield: profits and income revenue. The first is simply a profit, or in rare cases the loss, which will be due to the difference between the price paid for the bond and the nominal value, which is returned at maturity. The latter are the total interest payments as a percentage of the price paid for the bond. This is not necessarily the same as the coupon rate as a bond with a nominal value of $ 100 (USD) and the coupon rate will pay five percent interest $ 5. However, if an investor buys a bond for $ 50, he will still receive an interest of $ 5, but will be ten percent income income.
There are several variants on the revenue of redemption, which are acknowledged on specific types of binding. For those where the issuer has the right to repay the money earlier, the "call for call" is considered that if this happens, less interest will be paid. “Return from the Pendy” is used forA situation where the bond holder has the right to earn it soon. The "yield to the worst" is used where the binding has one or more of these options and is the lowest possible return.