Sources of Finance: Debt part b

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  1. Avatar of m23ahmuda m23ahmuda says:
    April 23, 2012 at 5:35 pm

    sir can u show the calculation of redemption yield

  2. Avatar of johnmoffat johnmoffat says:
    April 17, 2012 at 2:55 pm

    The redemption yield takes into account not just the interest each year but also the “gain or loss” on redemption (repayment) – i.e. the difference between the price to pay now (market value) and the amount repaid on redemption.

    • Avatar of atiq422 atiq422 says:
      June 24, 2012 at 12:22 pm

      @johnmoffat, so if we paid 140 for 100$ loan note it means on the date of repayment we are suffering loss of 29%. 100 divide by 140!! m i right sir??

      • Avatar of johnmoffat johnmoffat says:
        June 24, 2012 at 2:56 pm

        @atiq422, There is a capital loss, but this is not the redemption yield for two reasons.

        Firstly it is the ‘overall’ return including the interest that is receivable.
        Secondly it is the annualised return.

        Although you cannot be expected to calculate it, it is in fact just the IRR of the flows.

  3. Avatar of jibran89 jibran89 says:
    April 17, 2012 at 2:49 pm

    i am still confused with the logic of redeeption yeild…

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