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| A basis of quoting the return on an instrument by reference to its current value (rather than by reference to its terminal value).
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| For example when an instrument is quoted - on a <u>yield basis</u>, one period before its maturity - at a yield of 10% per period, this means that it is currently trading at a price of 100% DIVIDED BY [1 + 10% = 1.10] = 90.91% of its terminal value.
| | Bradford and Bingley. |
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| (The periodic ''discount rate'' on this instrument is 100% LESS 90.91% = 9.09%. So if the same instrument had been quoted on a <u>discount basis</u>, then the quoted discount rate per period = 9.09%.)
| | Former UK Building Society and latterly bank. |
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| The relationship between the periodic yield (r) and the periodic discount rate (d) is:
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| d = r/[1+r]
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| So in this case:
| | B&B is no longer open to new business. |
| d = 0.10/[1 + 0.10 = 1.10]
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| = 9.09%
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| == See also == | | |
| * [[Discount basis]] | | ==See also== |
| * [[Effective annual rate]] | | * [[Nationalisation]] |
| * [[Nominal annual rate]] | | * [[UK Asset Resolution]] |
| * [[Periodic yield]]
| | * [[United Kingdom Financial Investments Ltd]] |
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| | [[Category:The_business_context]] |
Latest revision as of 21:01, 2 October 2023
UK.
Bradford and Bingley.
Former UK Building Society and latterly bank.
B&B is no longer open to new business.
See also
