Kay Review and Yield: Difference between pages

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A government sponsored review into UK equity markets set up in 2011 and led by Professor John Kay.
1.


The review was established to ask how well equity markets are achieving the following core purposes:
The rate of return (or cost) <i>on the current market value</i> of an asset (or liability), usually expressed as a percentage per annum.


1. Enhancing the performance of UK companies by facilitating investment and enabling effective governance and decision making in support of long-term profitability and growth; and
For example, today’s yield to maturity of a bond measures the total return to an investor in the bond, reflecting both (i) the interest income over the remaining life of the bond and (ii) any capital gain (or loss) from today’s market value to the redemption amount payable at maturity.


2. Enabling investors to benefit from this corporate activity in the form of returns from equity investment.  
When the market yield to maturity is applied to discount the future cashflows of the asset or liability, the net present value of all of the cashflows - including the current market purchase price - is Nil.


The review was designed assess to what extent equity market participants are excessively focused on short-term outcomes to the detriment of the core purposes (1. and 2. noted above) and if so, what actions should be taken to address this problem.


It therefore examines the incentives, motivations and timescales of the following participants in the equity markets – end investors, pension funds, advisers, fund managers, the market and company boards – and also the relationships between them.
2.


Dividend yield.


The Kay Report, published in 2012 was welcomed, by the UK Government in its response of the same year.


Implementation of the recommendations continues to be monitored.
3.
 
More broadly, any measure of a rate of return or borrowing cost.
 
In this broader sense, yield may be calculated and expressed on a number of different bases.
 
For this reason it is essential to identify clearly the basis on which a given yield is expressed, before using it for calculation or comparison.
 
 
4.
 
Tax yield.




== See also ==
== See also ==
* [[Corporate governance]]
* [[Credit spread ]]
* [[Equity]]
* [[Discount instruments]]
* [[Discount rate]]
* [[Discount yield]]
* [[Dividend yield]]
* [[Forward yield]]
* [[High-yield]]
* [[Interest]]
* [[Interest rate]]
* [[Liquidity]]
* [[Nominal annual rate]]
* [[Nominal annual yield]]
* [[Par yield]]
* [[Periodic rate of interest]]
* [[Periodic yield]]
* [[Rate of return]]
* [[Security]]
* [[SLY]]
* [[Sterling commercial paper]]
* [[Tax yield]]
* [[Yield spread]]
* [[Yield to maturity]]
* [[Zero coupon yield]]
 


===Other resources===


====Other links====
*[[Media:2015_06_June_-_Safety_first.pdf| Safety first, The Treasurer]]
[https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/367070/bis-14-1157-implementation-of-the-kay-review-progress-report.pdf Building a culture of long-term equity investment - Implementation of the Kay Review:Progress Report, Oct 2014]
*[http://www.treasurers.org/node/8837 Triumph with timelines, The Treasurer]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Corporate_finance]]
[[Category:Intercompany_funding]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 19:29, 17 February 2019

1.

The rate of return (or cost) on the current market value of an asset (or liability), usually expressed as a percentage per annum.

For example, today’s yield to maturity of a bond measures the total return to an investor in the bond, reflecting both (i) the interest income over the remaining life of the bond and (ii) any capital gain (or loss) from today’s market value to the redemption amount payable at maturity.

When the market yield to maturity is applied to discount the future cashflows of the asset or liability, the net present value of all of the cashflows - including the current market purchase price - is Nil.


2.

Dividend yield.


3.

More broadly, any measure of a rate of return or borrowing cost.

In this broader sense, yield may be calculated and expressed on a number of different bases.

For this reason it is essential to identify clearly the basis on which a given yield is expressed, before using it for calculation or comparison.


4.

Tax yield.


See also


Other resources

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