Periodic yield and Private placement: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Layout.)
 
imported>Doug Williamson
(Altered order of ACT website links)
 
Line 1: Line 1:
__NOTOC__
This is a form of securities issuance that has no exact definition.
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.  


It usually refers to an issue that has been designed for a specific set of investor needs at a particular time. 


==Example 1==
As such it is not expected to be traded in the secondary market and is not a 'public' issue.
GBP 1 million is borrowed or invested.  


GBP 1.03 million is repayable at the end of the period.  
It is not normally expected to be listed on an exchange.


A wide variety of securities under various names are private placements. In Germany, [[Schuldschein]] are a form of private placements, for example.


The periodic yield (r) is:


r = (End amount / start amount) - 1
== See also ==
* [[Issue]]
* [[Placement]]
* [[Rule 144A]]
* [[Secondary market]]
* [[Security]]


= (1.03 / 1) - 1


= 0.03
== ACT Website links ==


= '''3%'''
[http://www.treasurers.org/blogs/ceo/201307 Hot money just got hotter...then evaporated, Colin Tyler, 5 July 2013]


 
[http://www.treasurers.org/node/8624 Developing a UK Private Placement market – report of the PP15+ working group]
==Example 2==
GBP  0.97 million is borrowed or invested.
 
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
 
= 0.030928
 
= '''3.0928%'''
 
 
''Check:''
 
0.97 x 1.030928 = 1.00.
 
 
==Example 3==
GBP  0.97 million is invested.
 
The periodic yield is 3.0928%.
 
Calculate the amount repayable at the end of the period.
 
===Solution===
The periodic yield (r) is defined as:
 
r = (End amount / start amount) - 1
 
 
''Rearranging this relationship:''
 
End amount = Start amount x (1 + r)
 
 
''Substituting the given information into this relationship:''
 
End amount = GBP 0.97m x (1 + 0.030928)
 
= '''GBP 1.00m'''
 
 
==Example 4==
An investment will pay out a single amount of GBP 1.00m at its final maturity after one period.
 
The periodic yield is 3.0928%.
 
Calculate the amount invested at the start of the period.
 
===Solution===
As before, the periodic yield (r) is defined as:
 
r = (End amount / start amount) - 1
 
 
''Rearranging this relationship:''
 
Start amount = End amount / (1 + r)
 
 
''Substitute the given data into this relationship:''
 
Start amount = GBP 1.00m / (1 + 0.030928)
 
= '''GBP 0.97m'''
 
 
''Check:''
 
0.97 x 1.030928 = 1.00, as expected.
 
 
==See also==
 
*[[Effective annual rate]]
*[[Discount rate]]
*[[Nominal annual rate]]
*[[Periodic discount rate]]
*[[Yield]]

Revision as of 14:37, 1 October 2013

This is a form of securities issuance that has no exact definition.

It usually refers to an issue that has been designed for a specific set of investor needs at a particular time.

As such it is not expected to be traded in the secondary market and is not a 'public' issue.

It is not normally expected to be listed on an exchange.

A wide variety of securities under various names are private placements. In Germany, Schuldschein are a form of private placements, for example.


See also


ACT Website links

Hot money just got hotter...then evaporated, Colin Tyler, 5 July 2013

Developing a UK Private Placement market – report of the PP15+ working group

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Periodic_yield&oldid=38475’