Hybrid and Nominal annual rate: Difference between pages

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1.
The rate of return ''per annum'' named or quoted in a market, under the quoting convention for the given market.


A term used to describe a financial instrument which displays characteristics of both debt and equity. 


Such instruments might be designed to be an intermediate (or mezzanine) category of capital between equity and debt, or to have some of the risk absorbing characteristics of equity and, ideally, the tax efficiency of debt.
Market quotations are usually given per annum, and for this reason the term ''nominal rate'' is often used interchangeably with nominal annual rate.


These are 'hybrid' financial instruments.


'''Example'''


2. ''Tax.''
GBP overnight interest payable at the periodic rate of 0.014% per day, would conventionally be quoted on a nominal annual basis as:


The term 'hybrid' can also refer to an entity which is treated differently for tax purposes in different tax jurisdictions.
= 365 x 0.014%


= 5.11%.


3.


More broadly, any structure, instrument or entity with mixed, or intermediate, characteristics between two or more other, simpler or standardised structures.  
Not to be confused with the effective annual rate.
 
''Sometimes also known as market rate or nominal rate.''




== See also ==
== See also ==
* [[Convertible debt]]
* [[Continuously compounded rate of return]]
* [[Hybrid clearing and settlement systems]]
* [[Daily rate]]
* [[Hybrid entity]]
* [[Effective annual rate]]
* [[Hybrid pension scheme]]
* [[Money market]]
* [[Mezzanine]]
* [[Nominal]]
* [[Warrant]]
* [[Periodic discount rate]]
* [[Periodic rate of interest]]
* [[Periodic yield]]
* [[Quarterly rate]]
* [[Semi-annual rate]]


[[Category:Long_term_funding]]
[[Category:Manage_risks]]

Revision as of 16:52, 25 October 2015

The rate of return per annum named or quoted in a market, under the quoting convention for the given market.


Market quotations are usually given per annum, and for this reason the term nominal rate is often used interchangeably with nominal annual rate.


Example

GBP overnight interest payable at the periodic rate of 0.014% per day, would conventionally be quoted on a nominal annual basis as:

= 365 x 0.014%

= 5.11%.


Not to be confused with the effective annual rate.

Sometimes also known as market rate or nominal rate.


See also