Periodic yield: Difference between revisions
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A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start. | A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start. | ||
==Example== | ==Example 1== | ||
GBP 1 million is borrowed. | GBP 1 million is borrowed. | ||
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= 3% | = 3% | ||
A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start. | |||
==Example 2== | |||
GBP 0.97 million is borrowed. | |||
GBP 1.00 million is repayable at the end of the period. | |||
The periodic yield (r) is: | |||
(End amount / start amount) - 1 | |||
= (1.00 / 0.97) - 1 | |||
= 0.031 | |||
= 3.1 | |||
Revision as of 10:53, 25 October 2015
A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start.
Example 1
GBP 1 million is borrowed.
GBP 1.03 million is repayable at the end of the period.
The periodic yield (r) is:
(End amount / start amount) - 1
= (1.03 / 1) - 1
= 0.03
= 3%
A rate of return - or cost of borrowing - expressed as the proportion by which the amount at the end of the period exceeds the amount at the start.
Example 2
GBP 0.97 million is borrowed.
GBP 1.00 million is repayable at the end of the period.
The periodic yield (r) is:
(End amount / start amount) - 1
= (1.00 / 0.97) - 1
= 0.031
= 3.1
