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Tax-equivalent yield tells you how much of … Continue reading → The post What Is the Tax-Equivalent Yield? appeared first on SmartAsset Blog. Bonds can provide passive income, some of which ...
The bond equivalent yield or BEY for an investment is a calculated annual percentage yield for an investment, which may not pay out yearly. It is not to be confused with a bond's coupon rate. This allows investments with different payout frequencies to be compared. [1]
The tax-equivalent yield of a municipal bond is the effective pre-tax yield that you would need to earn to equal the tax-free yield on the muni. If you’re considering investing in muni bonds, it ...
yield to put assumes that the bondholder sells the bond back to the issuer at the first opportunity; and; yield to worst is the lowest of the yield to all possible call dates, yield to all possible put dates and yield to maturity. [7] Par yield assumes that the security's market price is equal to par value (also known as face value or nominal ...
Tax-Equivalent Yield (TEY) – This is the return that a taxable bond needs to match the yield on a comparable tax-exempt bond. Bond Price vs. Yield: Why It Matters?
For example, a nominal interest rate of 6% compounded monthly is equivalent to an effective interest rate of 6.17%. 6% compounded monthly is credited as 6%/12 = 0.005 every month. After one year, the initial capital is increased by the factor (1 + 0.005) 12 ≈ 1.0617. Note that the yield increases with the frequency of compounding.
Yield to put (YTP): same as yield to call, but when the bond holder has the option to sell the bond back to the issuer at a fixed price on specified date. Yield to worst (YTW): when a bond is callable, puttable, exchangeable, or has other features, the yield to worst is the lowest yield of yield to maturity, yield to call, yield to put, and others.
High-yield bonds. Sometimes referred to as junk bonds, high-yield bonds offer higher interest rates to investors because they are considered greater credit risks than investment-grade bonds. High ...