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.  
GBP 1.03 million is repayable at the end of the period.  
GBP 1.03 million is repayable at the end of the period.  


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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
= 0.030928
= 3.0928%





Revision as of 10:54, 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

= 0.030928

= 3.0928%


See also