Business Accounting volume 4
Business Accounting volume 4
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In our eReader you can find the full English version of the book. Read Business Accounting volume 4 Online - link to read the book on full screen. Our eReader also allows you to upload and read Pdf, Txt, ePub and fb2 books. In the Mini eReder on the page below you can quickly view all pages of the book - Read Book Business Accounting volume 4
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To quickly assess the difficulty of the text, read a short excerpt:
5. Nominal Interest vs. Effective Interest With respect to all bonds bought above or below par there are always two rates of interest involved : ( 1 ) a nominal or cash rate, which is a certain percentage of par and which is indicated by the coupons; and (2) an BONDS AND BOND INVESTMENTS 127 effective or income rate, which is a certain percentage of the amount originally invested and remaining invested. The effective or income rate is the actual return received on the price paid for the bond. T...hus, ten $100 bonds bought at a premium of 10% would cost $1, 100. As- suming that the nominal rate of interest is 6% payable annually, the investment of $1, 100 would yield an annual return of $60. Therefore, if $1, 100 yields $60 interest, $100 would yield 1/11 of this sum, or $5. 45, or 5. 45% interest, which is the effective yield on the bonds.
In actual practice the determination of the effective interest rate is rarely so simple a problem as in the fore- going example. Bonds run for many years and are usually purchased as a permanent investment rather than as a speculation, and therefore as a rule many in- terest dates must elapse before the time of their re- demption.
What to read after Business Accounting volume 4?
You can find similar books in the "Read Also" column, or choose other free books by Harold Dudley Greeley to read onlineMoreLess
To quickly assess the difficulty of the text, read a short excerpt:
5. Nominal Interest vs. Effective Interest With respect to all bonds bought above or below par there are always two rates of interest involved : ( 1 ) a nominal or cash rate, which is a certain percentage of par and which is indicated by the coupons; and (2) an BONDS AND BOND INVESTMENTS 127 effective or income rate, which is a certain percentage of the amount originally invested and remaining invested. The effective or income rate is the actual return received on the price paid for the bond. T...hus, ten $100 bonds bought at a premium of 10% would cost $1, 100. As- suming that the nominal rate of interest is 6% payable annually, the investment of $1, 100 would yield an annual return of $60. Therefore, if $1, 100 yields $60 interest, $100 would yield 1/11 of this sum, or $5. 45, or 5. 45% interest, which is the effective yield on the bonds.
In actual practice the determination of the effective interest rate is rarely so simple a problem as in the fore- going example. Bonds run for many years and are usually purchased as a permanent investment rather than as a speculation, and therefore as a rule many in- terest dates must elapse before the time of their re- demption.
What to read after Business Accounting volume 4?
You can find similar books in the "Read Also" column, or choose other free books by Harold Dudley Greeley to read onlineMoreLess
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