There are a number of different methods of calculating investment return, depending on what you’re trying to measure. Perhaps the most basic is total return, which is simply an investment’s ending balance expressed as a percent of its beginning balance. Total return includes capital appreciation and income components; it assumes all income distributions are reinvested. To annualize total return, you’ll need to calculate the compound annual return, which generally requires using a financial calculator. It’s important to keep in mind that you need a greater percentage gain after a losing year in order to break even on your investment.
More discussion of this when blog posts 22 Feb 2017 http://wp.me/p2Oizj-Hk
What are bonds. elements of bonds. FACE VALUE. bondholders. dividend rate. yield rate. coupon dates. maturity date.
Lesson by grade 11 students. of k23 curriculum. first batch 2k16
The Retirement 101 Enrollment Presentation is the companion piece to the Retirement 101 Enrollment Guide, the marquee collateral in the Nationwide Retirement enrollment drive. Together they exceeded the 2011 standard entity first-year deposits goal of $84.8M by 25%, netting new participant deposits of $112.4M in its first year.
What are bonds. elements of bonds. FACE VALUE. bondholders. dividend rate. yield rate. coupon dates. maturity date.
Lesson by grade 11 students. of k23 curriculum. first batch 2k16
The Retirement 101 Enrollment Presentation is the companion piece to the Retirement 101 Enrollment Guide, the marquee collateral in the Nationwide Retirement enrollment drive. Together they exceeded the 2011 standard entity first-year deposits goal of $84.8M by 25%, netting new participant deposits of $112.4M in its first year.
Chapter 7Finding the Required Rate of Return for an Invest.docxmccormicknadine86
Chapter 7
Finding the Required Rate of Return for an Investment
Associated Press
Learning Objectives
A�er studying this chapter, you should be able to:
Explain the significance of required return and its components.
Describe the rela�onship between risk and return and how to measure for both.
Iden�fy how to use required return to determine valua�on.
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Ch. 7 Introduction
Investors come in many forms. They may be individuals who invest in corporate stocks, re�rement accounts that invest in bonds, partnerships that invest in apartment
buildings, or corpora�ons that invest in produc�ve projects. One thing all these investors have in common is their desire to increase their wealth, which is done by iden�fying
projects whose value is expected to exceed their cost. If we invest $100 today in a project that produces cash flows worth $125 in today's terms, then we increase our
wealth by $25. Equa�on (7.1) is the basic formula for es�ma�ng the value of an investment, which is found by discoun�ng the expected future cash flows back to today's
equivalent value at a rate of return that is appropriate given the investment's risk. This fundamental formula for assessing value was first introduced in Chapter 2 and further
developed in Chapters 4 and 5, while Chapter 3 explored cash flows in some detail.
One part of the formula that hasn't been covered is how to es�mate the required return that is appropriate to use as the discount rate in the valua�on calcula�on. Finding
the required rate of return is the topic of this chapter (and is expanded upon in Chapter 8).
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Like children, who need to be bribed with the promise of a reward
for their good behavior, investors require a worthwhile incen�ve
before they will commit to an investment.
Beyond/SuperStock
7.1 The Building Blocks of the Required Return
In Chapter 2, we introduced the idea that investors are assumed to be ra�onal and risk averse. Because they
are (mostly!) ra�onal, investors will give up control of their money for a period of �me by inves�ng only if they
expect to increase their wealth. Therefore, investors have an almost ins�nctual return requirement as they
invest. For example, a ra�onal investor would always want to earn at least the risk-free rate of return when
inves�ng in some security or project. Otherwise, they would be se�ling for a return lower than what they
could be assured of by simply deposi�ng the funds in a savings account that is guaranteed by both the bank
and the government through the Federal Deposit Insurance Corpora�on (FDIC). The FDIC guarantees the first
$250,000 of funds depos ...
Mathcad seven common financial computationsJulio Banks
The most important factor in a marital relationship is the wise management of the family income. I strongly recommend that dating or married couples consider mastering the simple financial calculations in this document. I have transcribed the reference document verbatim to the level allowed by Mathcad. The numerical results exactly match all of the examples provided in the reference article given included at the end of the Mathcad calculations. This last method is useful when borrowing or lending and need to know the interest
rate of return (ROR) being paid or collected, respectively. Henceforth, let us refer to i simply, as ROR.
time value of money
,
concept of time value of money
,
significance of time value of money
,
present value vs future value
,
solve for the present value
,
simple vs compound interest rate
,
nominal vs effective annual interest rates
,
future value of a lump sum
,
solve for the future value
,
present value of a lump sum
,
types of annuity
,
future value of an annuity
The Dynamic Implications of Sequence Risk on a Distribution Portfolio Journal...Better Financial Education
A practical method for advisers to measure exposure to sequence risk is through evaluation of the current probability of failure rate (which I've later renames as iteration failure rate to reflect measurement of the Monte Carlo simulation rather than the plan itself - two different things). This paper lead to a deeper investigation of failure rates thus leading to two subsequent papers discovering the three-dimensional nature of simulations over various time periods and allocations, as well as application of longevity to the simulation modeling.
Can You Pick The Next Winner?
Asset Class Performance 2002‐2021 of various global markets.
Pick any color in any earlier year and see what
happened in any later year. Bottom go up and top go down randomly.
*Note the 20 year results also
change asset class positions
over the years (don't predict
the future).
Annual stock market returns are unpredictable, but “up” years have occurred much more frequently than “down” years in the US. That may be reassuring to investors, especially if they find market downturns unsettling.
The US stock market posted positive returns in 75% of thecalendar years from 1926 through 2021.
• The market gained an annualized average of 10.2% during this period. Yet nearly two-thirds of yearly observations were at least 10 percentage points above or below the average.
• Another noteworthy trend: More than two-thirds of the down years were followed by up years. The most recent example: a 5.0% loss in 2018 followed by a 30.4% gain in 2019.
Prototype software example of aging model incorporating both portfolio and lo...Better Financial Education
This first appeared in blog post that describes the graphs in more details
https://blog.betterfinancialeducation.com/sustainable-retirement/what-are-the-three-paradigms-of-retirement-planning/
Prototype software example of aging model incorporating both portfolio and longevity percentile statistics along with consumer spending trend line of “Real People” (which is not based here on spending percentile statistics, but on research averages). Starting balance $500,000 with $36,000 Social Security. Two simple graphs by age answer many retiree questions about potential future spending and balances. Creates a whole different discussion. Also illustrates why age 95 is a poor reference for planning since it doesn’t plan or consider aging into future ages from the beginning of retirement.
Finding the parallels between flying a jet and helping people
develop financial plans may be difficult for the average person, but for Larry R. Frank Sr., the similarities between these two activities are crystal clear.
A question of equilibrium - can there be more buyers than sellers? Or more se...Better Financial Education
Have you ever wondered who is buying if so many people are selling?
The notion that sellers can outnumber buyers on
down days doesn’t make sense. What the newscasters should say, of course, is that prices adjusted lower because would-be buyers weren’t prepared to pay
the former price.
What happens in such a case is either the would-be sellers sit on their shares or prices quickly adjust to the point where supply and demand come into balance and transactions occur at a price that both buyers
and sellers find mutually beneficial. Economists refer
to this as equilibrium.
The Happiness Equation as it relates to investing is an interrelationship between your perceptions and expectations of investing and events. How do you manage happiness when you can't manage the markets?
A mistake many inexperienced sailors make is not having a plan at all. They embark without a clear sense of their destination. And once they do decide, they often find themselves lost at sea in the wrong boat
with inadequate provisions.
Destination, contingencies when trouble comes up, course corrections, bad weather and more can happen on the journey. How do you properly prepare for sailing is much the same as investing.
When setting expectations,
it’s helpful to see the range of outcomes experienced
by investors historically. For example, how often have
the stock market’s annual returns actually aligned with
its long-term average? Better yet, how often are the markets positive?
How many times can you use a source of money in your retirement plan? Turns out, just once, unless you know ahead of time WHEN something is going to happen, or if something was NOT going to happen. Since we don't know either, we need to plan on what resources may solve which issues we have in retirement. That plan should be documented in some fashion, otherwise our minds begin to allocate limited resources to everything - and that's when life happens.
This will be discussed in detail on Better Financial Education's blog on the 4th of Oct 2017 http://wp.me/p2Oizj-Jc .
The world is risky. The future is uncertain. And many of the decisions we make can have a pro-found impact on our future welfare. Risk cannot be eliminated, but it can be managed.
Blog post for further perspective http://wp.me/p2Oizj-I8 (scheduled to post 17 May 17).
Robo-advisor portfolios may be well diversified, they also contain construction gaps that should not be present in well-constructed portfolios.
Post discussing this in broader context schedule for 3 May 2017 http://wp.me/p2Oizj-HV
Robo-advisor portfolios may be well diversified, they also contain construction gaps that should not be present in well-constructed portfolios.
Post discussing this in broader context schedule for 3 May 2017 http://wp.me/p2Oizj-HV
This paper essentially demonstrates to academics and the profession that the current method of computing retirement income essentially arrives at a single solution applicable only to today; it does not model the future as currently interpreted. Our paper contrasts the difference between a calculation and a "multi-cast" simulation model.
Our research summary paper is published in the Journal of Financial Planning, Nov 2016. A link to the paper is available here "Combining Stochastic Simulations and Actuarial Withdrawals into One Model." ( http://bit.ly/2eLBUq9 )
Our working paper documenting our research project won the CFP® Board Best Research Paper Award at the 2016 Academy of Financial Services ( http://academyfinancial.org/ ) annual conference through an academic panel using a blind review process. "Certainty of Lifestyle: Contrasting a Simulation Over a Fixed Period versus Multiple Period Models" ( http://bit.ly/2dWtuNz )
In early Nov 2016, two blogs will post going into more insights from the research: Just where does the fear of outliving our money come from? Part I with link to Part II. ( http://wp.me/p2Oizj-H2 )
Investing makes it possible for many of us to achieve important lifetime goals, such as retirement. That’s why we employ an investment approach based on almost nine decades of data, analysis and research, insights from behavioral finance and close relationships with leading academics. There are four key concepts which play a vital role in the construction and management of our portfolios. Together, they add up to a distinctive long-term, approach we call Asset Class, or evidence-based, Investing
The article discusses an alternative approach to experiencing the costs of index reconstitution, called “Asset Classes,” which allow the fund manager broader leeway as to when to buy or sell, along with a broader range of holdings. This discussion begins in the section called “Decision Two: Indexing or Asset Class Investing?”
The Asset Class approach, also referred to by others as "Factor Investing," is based on what has become to be called “Evidence Based Investing” due to roots discussed in the linked "Factor Investing" article, that come from academic (peer reviewed and repeatable results) foundation that continues to this day.
My blog post discussing this article is scheduled to post 8 Feb 2017 http://wp.me/p2Oizj-Hh
There is a cost to indexing that most investors are unaware of. It is called “reconstitution.”
A blog post is scheduled for 8 Feb 2017 discussing this article.
http://wp.me/p2Oizj-Hh
Most people look at the benefits they would receive today when making their decision about when to begin receiving their Social Security. They also underestimate how long they may live unless they already have medical issues that are known to reduce longevity.
These two impulses cause many couples to begin their benefits too early which has an adverse effect for survivor income. When one person dies, the lowest benefit “goes away” and the highest benefit “remains.”
The article below explains how that works with a couple and their Social Security benefits at various ages.
This brief slideshow discusses some elements necessary to recognize that our emotions and reactions to investing and markets often hurt results. Discipline and a focus on what you can control are important to success.
There is an investing approach that is based on discipline and evidence from research in both the finance and behavioral finance sciences.
Scheduled to post to Better Financial Education blog 11 Jan 2017 http://wp.me/p2Oizj-vH
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Which Crypto to Buy Today for Short-Term in May-June 2024.pdf
The mathematics of investing
1. The Mathematics of Investing
Description:
This report is a handy reference for those who want to calculate their own investment metrics such as
yield and annual return.
Synopsis:
There are a number of different methods of calculating investment return, depending on what you’re
trying to measure. Perhaps the most basic is total return, which is simply an investment’s ending balance
expressed as a percent of its beginning balance. Total return includes capital appreciation and income
components; it assumes all income distributions are reinvested. To annualize total return, you’ll need to
calculate the compound annual return, which generally requires using a financial calculator. It’s important
to keep in mind that you need a greater percentage gain after a losing year in order to break even on your
investment.
In calculating your return, you may also wish to take taxes and inflation into account by calculating the
"real" rate of return. To determine an inflation-adjusted rate of return, you’ll need to assume or estimate
an inflation rate over the investment holding period. To look at your investment performance on an after-
tax basis, you’ll need to know your federal income tax bracket and state tax rate.
You should also keep in mind that some investments, such as municipal bonds, may be exempt from
state and local taxes. When comparing bond yields, bond investors must use a taxable-equivalent yield to
compare the rate of return on a tax-free municipal bond with that of a taxable bond. A financial planner
can assist you with these calculations and help you select the performance measures that best fit your
investments.
Body:
Tracking the performance of your investments can get confusing, due to the various ways of calculating
returns. Whether you prefer to use a calculator or spreadsheet software, the following discussion will help
you use and calculate common measurements of investment performance to truly judge your investment
results.
Determining Rate of Return
Probably the most basic calculation for investors is return on investment. Total return includes capital
appreciation and income components, and assumes all income distributions are reinvested. If you
automatically reinvest distributions such as interest or dividends, total return is calculated by taking the
difference in an investment portfolio's ending and beginning balance, and dividing that difference by the
beginning balance. In formula format, it would look like this:
2. Page 2
Total Return:
(Calculator or Spreadsheet:)
(Ending Balance [EB] - Beginning Balance [BB])
Beginning Balance
For example, Joe started with an investment of $10,000. After five years, his portfolio's value increased to
$12,000. He can determine his portfolio's total return as follows: ($12,000 - $10,000) / $10,000 = 0.20, or
20%. Therefore, Joe can say his $10,000 has increased by 20%.
To annualize this total return, you'll need to calculate the compound annual return.
For example, Jane also originally invested $10,000. However, it took her portfolio only two years to grow
to $12,000. If you measure the performances of both Joe's and Jane's portfolios by using the formula
above, both increased by 20%. To take the difference in time into consideration, calculate the compound
annualized rate of return (you will need a calculator that can raise to powers to calculate this).
Compound Annualized Rate of Return =
Calculator: [(EB / BB)^(1 / # of years) - 1]
Spreadsheet: [(EB/BB)^(1/# of years)] - 1
Using this formula to calculate Joe's annual compound return, we take $12,000 / $10,000 = 1.2. Then, we
raise 1.2 to the 1/5 (or 0.20) power, giving us 1.03714. Subtract out 1, and we have 0.03714, or 3.714%,
which is Joe's annualized return. Jane's portfolio, on the other hand, performed much better, earning
9.54% on average every year. Of course, two different investments should not be judged solely on
performance results for short periods of time or for different time periods. The risk of the portfolio must
also be considered.
10% Plus 10% Doesn't Equal 20%
You might think that Jane's annualized return should have been 10%, and not 9.54%, since she invested
her money for two years and 10% + 10% = 20%, which was her total rate of return. However, here's
where the math can get tricky.
Let's just say that Jane's $10,000 did grow 10% each year for two years. At the end of the first year, Jane
would have accumulated $11,000. In year one, $10,000 x (1 + 0.10) = $11,000. In year two, if Jane's
$11,000 grows by another 10%, this gives us $11,000 x (1 + 0.10) = $12,100, which is more than the
$12,000 Jane actually accumulated. This $100 discrepancy explains why Jane only earned a 9.54%, and
not a 10%, compound annual return.
Similarly, the math doesn't intuitively make sense when you're losing money. If Jane's $10,000
investment had lost 10% the first year, she would have $9,000 left. In year two, if Jane's investment
rebounds by exactly the same amount - 10% - Jane would not break even, as you might expect. In fact, a
10% increase in $9,000 results in only $9,900. Therefore, you need a greater percentage gain after a
losing year in order to break even on your investment.
The Rule of 72
If you need an approximation of how your nest egg might grow, you might want to use the Rule of 72. The
Rule of 72 can reveal how long it could take your money to double at a particular rate of return. Use the
following formula:
3. Page 3
Rule of 72
72 / Annual Rate of Return = Number of years it will take for your money to double
at a particular rate of return
For example, Jane and Joe want to figure out how long it will take their $10,000 investments to double to
$20,000. They use their compound annual rates of return (as figured previously) to estimate how many
years it will take to double their money. Joe estimates it will take over 19 years (72 / 3.71% = 19.4 years).
However, Jane's portfolio could grow to $20,000 in less than eight years (72 / 9.54% = 7.55 years). It is
important to note that the Rule of 72 does not guarantee investment results or function as a predictor of
how your investment will perform. It is simply an approximation of the impact a targeted rate of return
would have. Investments are subject to fluctuating returns, and there can never be a guarantee that any
investment will double in value.
Remember Taxes and Inflation
You should always take into consideration the effects of taxes and inflation when constructing an
investment plan to meet your financial objectives. After all, even though Jane earned an average 9.54%
on her investments every year, her "real" rate of return will be reduced by taxes and increases in the cost
of living.
Depending on Jane's situation and income tax bracket, as much as 39.6% of her 9.54% compound
annual return could be paid in federal taxes, leaving her with [9.54% x (1 - 0.396)], or 5.76%.
Then, Jane must figure in the effects of inflation on her earnings. For example, assume inflation averaged
3% over the two years that Jane invested her $10,000, and that she earned a 5.76% compound annual
return after taxes, but before inflation. Now, Jane must adjust her after-tax return for the loss of
purchasing power caused by inflation. To determine an inflation-adjusted rate of return, use the following
formula:
Inflation-Adjusted Return:
(Calculator or Spreadsheet:)
[(1+Rate of Return)/(1+Inflation Rate) - 1] x 100
Jane's inflation-adjusted, after-tax rate of return is [(1.0576) / (1.03) - 1] x 100, or 2.68%. Keep in mind
that we've assumed the highest federal income tax bracket (which does not apply to every investor);
however, the example does show the impact that taxes and inflation can have on your return.
Bond Yields
Bond investors generally receive periodic income from their investment. The amount of income paid to
the holder of the bond is based on the bond's coupon rate. For instance, Jane buys a $1,000 bond that
pays a 7% coupon rate and therefore receives $70 a year ($1,000 x 0.07) for as long as she owns the
bond. She can determine the income return (or yield) on this bond by taking the coupon dollar amount
and dividing it by the purchase price of the bond, or $70 / $1,000 = 7.00%. In this example, the yield and
the coupon rate are the same because Jane purchased the bond at its original (or "face") value of $1,000.
However, that yield can fluctuate depending on how much an investor pays for a bond. Let's say Jane's
bond cost $1,200. Its current yield is now only ($70 / $1,200), or 5.83%.
Bond prices and yields may change over time with changes in interest rates. As the price of a bond
increases, its yield decreases. Conversely, as bond prices decrease, yields increase. If Jane's bond
increases in value, her total return (income plus price appreciation) on the investment would be higher