0
$\begingroup$

Suppose an investor who pays £120 on 15 July 2007 for £100 nominal of a six-year stock with half-yearly coupon payments of 13% pa and is not subject to tax. The stock is redeemable at par. Calculate the running yield?

I understood entire question but what actually is running yield?

2 Answers 2

1

Running yield is the annual income from an investment divided by its current market value. Unless the market price is equal to the nominal price, it will not be the same as the nominal yield or the redemption yield.

So in this case $\dfrac{13}{120}$ or about 10.83%.

  • 0
    ok, got it thank you.2011-05-20
1

"Used to describe the income investors get from their portfolio as a percentage of market value of the securities."

http://www.investopedia.com/terms/r/runningyield.asp