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What is a true yield?

True Yield is your actual return on investment. Using the example above, the initial yield for the N100,000.00 is 10 per cent. However, because they pay you interest upfront, your true yield is actually the N10,000.00 in interest divided by the N90,000.00 actually deducted from your account. That is N10,000.00/N90,000.00 0r 11.11 per cent. This is thus higher than the 10 per cent at which you won. The true yield is completely earned when you hold to maturity.

2017-09-06T15:59:22+00:00
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