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Home > QFINANCE Dictionary > Definition of effective yield

Definition of

effective yield

Stockholding & Investments

investor's total projected return if security matures the total return to an investor if a fixed interest security is held to maturity, in other words, the aggregate of gross interest received and the capital gain or loss at redemption, annualized.

Related definitions of "effective yield"

effective yield - Related Articles

  • Quantitative Easing and the Yield on the Ten Year Gilt

    White Papers

    base rate you should be looking at it’s the 10Y, the yield on the 10Y. There are two consequences of any form of Central Authority activity in Financial Markets (including QE); the first being “Round Tripping”; and the second is “Crowding Out”. The latter is by far the more serious. The important issue
    By John A. Morrison

  • Tools for Measuring Interest Rate Risk

    Best Practice

    the price–yield relationship to bend back the opposite direction (curve b–b′) relative to an option-free bond. The reason for this effect is that as yields fall the value of the embedded call option increases. The bondholder is short the call option, so the increase in its value causes the callable bond
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  • The Insurance Sector: Plenty of Silver Lining to Be Found

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    It is already clear that the shape of the yield curve is going to be of considerable importance in the months ahead. So far, governments have tended to implement monetary policy by urging central banks to reduce short-term interest rates. The next step in this program has been quantitative easing (QE), namely governments going out and buying certain private and public-sector assets in significant amounts, to the tune of hundreds of billions of pounds
    By Andrew Milligan

  • Portfolio Analysis: Duration, Convexity, and Immunization

    Calculations

    Duration is a measure of how sensitive the price of bonds are to changes in interest rates (otherwise known as interest rate risk). For example, if interest rates rise 1%, a bond with a two-year duration will fall about 2% in value. Convexity is a measure of how prices rise when yields fall, and can

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Definitions of ’effective yield’ and meaning of ’effective yield’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’effective yield’ and other financial terms with our online QFINANCE Financial Dictionary.

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