effective yield

Effective yield

Yield or return on a short-term investment after adjustment for the change in exchange rates over the period of concern.

Annual Percentage Yield

The yield on an investment in one year, taking into account the effects of compounding. For example, if one has a fixed-income investment such as certificate of deposit that pays 3% in interest each month, the annual percentage yield is more than 3% because compounding the interest results in a (slightly) higher return each month. In this example, the annual effective yield is calculated thus:

Annual percentage yield = (1.03)^12 - 1 = .43 = 43%, where 1.03 is 1 plus the monthly interest and 12 is the number of times in a year interest is compounded. It is also known as the annual effective yield.

effective yield

A calculation of the return on an investment that considers the price paid,the time held,and the interest received.

References in periodicals archive ?
The Company amortizes and accretes premiums and discounts associated with purchases of agency securities into interest income over the estimated life of such securities based on actual and projected CPRs using the effective yield method.
99985% of their face value, with an effective yield of 3.
The weighted average effective yield of new CLO equity investments made by the company during the quarter was 16.
The tax-free component makes these bonds attractive, especially for those in higher tax brackets (see Effective Yield on NTPC Tax-free Bonds).
The improved guest experience and effective yield management have led to significant profit growth.
Management said the money is held in bank deposits yielding 9% annually, but the effective yield is about 6% because some of the funds are used for corporate purposes over the year.
OOur overall strategy is closely tied to effective yield management,O he said in a speech to FedEx investors.
The bonds, which have six-year and 10-year maturity, offer an effective yield of 11.
By buying up quantities of government bonds the Bank has pushed down the effective yield on them, in turn weighing on swap rates in money markets.
Growth in international express package shipments and effective yield management on the domestic air transportation front played key roles in FedEx Corp.

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