understanding financial jargon
Gross Redemption Yield (GRY)
The normal yield value quoted for a bond is the flat yield which is the fixed coupon divided by the current bond price as a percentage. The Gross Redemption Yield (GRY) takes into account not only the flat yield but also any capital gain received by holding the bond to maturity.
If for example a bond has a maturity value of £100 in 2 years time but is bought now for £95, there will be a capital gain of 5% over two years (approxiamtely 2.47% per annum) to add to the flat yield, if the bond is held to maturity. If the flat yield is 6% per annum then the Gross Redemption Yield is 8.47% per annum.
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If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
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