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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › INTERST YIELD
SIR COULD YOU EXPLAIN WHAT IS THE DEFFRENCE BETWEEN INTREST YIELD AND REDEMPTION YIELD AND COST OF EQUITY
Interest yield is the interest or coupon rate expressed as a percentage of the market price. A measure of return on investment to the debt holders. (Ignoring redemption)
The redemption yield is the overall return taking into account both interest and the amount of redemption (IRR)
Some investors prefer high interest pa – older people with low income
Whilst others are less about interest they want capital growth (younger working salaried)
Cost of equity / finance to the company is the return the investors expect to achieve on their shares