Periodic yield and Principle: Difference between pages

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imported>Doug Williamson
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imported>Doug Williamson
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A principle is a basis or fundamental understanding, from which other more detailed conclusions and courses of actions can be worked out.
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.  


For example, the first principle of the ACT Ethical Code is integrity.


==Example 1==
GBP 1 million is borrowed or invested.


GBP 1.03 million is repayable at the end of the period.  
Not to be confused with ''[[principal]]'', which is different.




The periodic yield (r) is:
== See also ==
*[[ACT Ethical Code]]
*[[Arm’s length principle]]
*[[Duality principle]]
*[[Equator Principles]]
*[[Generally accepted accounting principles]]
*[[Green Bond Principles]]
*[[Green Loan Principles]]
*[[INSOL Lenders Principles]]
*[[Integrated Thinking Principles]]
*[[Integrity]]
* [[Poseidon Principles]]
* [[Principles for Responsible Banking]]
* [[Principles for Sustainable Insurance]]
*[[Principal]]
*[[Separate personality principle]]
*[[Social Bond Principles]]
*[[Social Loan Principles]]
*[[Statement of funding principles]]
*[[Statement of investment principles]]
* [[Sustainability-Linked Bond Principles]]  (SLBP)
*[[UN Guiding Principles on Business and Human Rights]]


r = (End amount / start amount) - 1
[[Category:Accounting,_tax_and_regulation]]
 
[[Category:The_business_context]]
''or''
[[Category:Ethics]]
 
[[Category:Identify_and_assess_risks]]
r = (End / Start) -1
[[Category:Manage_risks]]
 
[[Category:Financial_products_and_markets]]
 
= (1.03 / 1) - 1
 
= 0.03
 
= '''3%'''
 
 
==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 / Start) - 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 / Start) - 1
 
 
''Rearranging this relationship:''
 
1 + r = End / Start
 
End = Start x (1 + r)
 
 
''Substituting the given information into this relationship:''
 
End = 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 / Start) - 1
 
 
''Rearranging this relationship:''
 
1 + r = End / Start
 
Start = End / (1 + r)
 
 
''Substitute the given data into this relationship:''
 
Start = 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 13:27, 23 April 2023

A principle is a basis or fundamental understanding, from which other more detailed conclusions and courses of actions can be worked out.

For example, the first principle of the ACT Ethical Code is integrity.


Not to be confused with principal, which is different.


See also

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