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Glossary of Terms
Y
Yankee bond.
A US dollar-denominated bond issued in the US domestic market by a non-US borrower.
A US dollar-denominated certificate of deposit (CD) issued in the US by a foreign bank through a US branch.
Abbreviation for a milliard = one billion (1,000,000,000).
Especially in foreign currency markets.
Especially in foreign currency markets.
1.
Dividend yield.
2.
The rate of return on the current market value of an asset or liability, usually expressed as a percentage per annum.
For example, today’s yield to maturity of a bond measures the total return to an investor in the bond, reflecting both the interest income over the life of the bond and any capital gain (or loss) from today’s market value to the redemption amount payable at maturity.
When the market yield to maturity is applied to discount the future cashflows of the asset or liability, the net present value of all of the cashflows - including the current market purchase price - is Nil.
Dividend yield.
2.
The rate of return on the current market value of an asset or liability, usually expressed as a percentage per annum.
For example, today’s yield to maturity of a bond measures the total return to an investor in the bond, reflecting both the interest income over the life of the bond and any capital gain (or loss) from today’s market value to the redemption amount payable at maturity.
When the market yield to maturity is applied to discount the future cashflows of the asset or liability, the net present value of all of the cashflows - including the current market purchase price - is Nil.
A basis of quoting the return on an instrument by reference to its current value (rather than by reference to its terminal value).
For example when an instrument is quoted - on a yield basis, one period before its maturity - at a yield of 10% per period, this means that it is currently trading at a price of 100% DIVIDED BY [1 + 10% = 1.10] = 90.91% of its terminal value.
(The periodic discount rate on this instrument is 100% LESS 90.91% = 9.09%. So if the same instrument had been quoted on a discount basis, then the quoted discount rate per period = 9.09%.)
The relationship between the periodic yield (r) and the periodic discount rate (d) is:
d = r/[1+r]
So in this case:
d = 0.10/[1 + 0.10 = 1.10]
= 9.09%
For example when an instrument is quoted - on a yield basis, one period before its maturity - at a yield of 10% per period, this means that it is currently trading at a price of 100% DIVIDED BY [1 + 10% = 1.10] = 90.91% of its terminal value.
(The periodic discount rate on this instrument is 100% LESS 90.91% = 9.09%. So if the same instrument had been quoted on a discount basis, then the quoted discount rate per period = 9.09%.)
The relationship between the periodic yield (r) and the periodic discount rate (d) is:
d = r/[1+r]
So in this case:
d = 0.10/[1 + 0.10 = 1.10]
= 9.09%
Market rates for different maturities of funds are usually different, with longer term rates usually - but not always - being higher.
A yield curve describes today’s market rates per annum on fixed rate funds for a series of otherwise comparable securities, having different maturities.
There are three ways of expressing today’s yield curve:
i. Zero coupon yield curve.
ii. Forward yield curve.
iii. Par yield curve.
If any one curve is known then each of the other two can be calculated by using no-arbitrage pricing assumptions.
The shape of today's yield curve is influenced by - but not entirely determined by - the market's expectations about future changes in market rates.
The yield curve is sometimes also known as the Term structure of interest rates.
A yield curve describes today’s market rates per annum on fixed rate funds for a series of otherwise comparable securities, having different maturities.
There are three ways of expressing today’s yield curve:
i. Zero coupon yield curve.
ii. Forward yield curve.
iii. Par yield curve.
If any one curve is known then each of the other two can be calculated by using no-arbitrage pricing assumptions.
The shape of today's yield curve is influenced by - but not entirely determined by - the market's expectations about future changes in market rates.
The yield curve is sometimes also known as the Term structure of interest rates.
The difference in the effective rate of interest offered by two debt securities.
(YTM). The measure of yield on a financial instrument - for example a bond - from the current date until maturity that takes into account the capital gain on a bond (or other financial instrument) trading at a discount, or the capital loss on a bond (or other financial instrument) trading at a premium.
Also known as Yield to redemption, or Redemption yield.
More specifically the return on a security held to maturity, taking account of the coupon and re-investment rates and the buying price compared to its face value. YTM assumes that all coupons are fully paid out on their due dates and reinvested at the same yield and that the principal is paid back in full upon maturity. It is an internal rate of return calculation performed on the security’s expected cash flows, including the initial investment outflow (= the current market value).
Also known as Yield to redemption, or Redemption yield.
More specifically the return on a security held to maturity, taking account of the coupon and re-investment rates and the buying price compared to its face value. YTM assumes that all coupons are fully paid out on their due dates and reinvested at the same yield and that the principal is paid back in full upon maturity. It is an internal rate of return calculation performed on the security’s expected cash flows, including the initial investment outflow (= the current market value).
Near enough the same as Yield to maturity.
Year On Year, particularly in the context of percentage growth.
For example if revenues have grown as follows:
Year 1: $100m
Year 2: $110m
Year 3: $132m
The related YOY percentage growth figures are calculated as:
Years 1-2: [110-100=10]/100 - 1 = 10%
Years 2-3: [132-110=22]/110 = 20%.
Also known as Y/Y.
For example if revenues have grown as follows:
Year 1: $100m
Year 2: $110m
Year 3: $132m
The related YOY percentage growth figures are calculated as:
Years 1-2: [110-100=10]/100 - 1 = 10%
Years 2-3: [132-110=22]/110 = 20%.
Also known as Y/Y.
Yield To Maturity.
A unit of Chinese currency, most commonly the renminbi.
The currency of the People's Republic of China (PROC).
Commonly abbreviated to 'yuan' or to 'renminbi'.
More strictly, the full term 'yuan renminbi' is analogous to the term 'pound sterling': one yuan being one unit of the currency (like a pound) and renminbi being the currency itself (like sterling).
Commonly abbreviated to 'yuan' or to 'renminbi'.
More strictly, the full term 'yuan renminbi' is analogous to the term 'pound sterling': one yuan being one unit of the currency (like a pound) and renminbi being the currency itself (like sterling).
