Fixed Interest securities

Question 1

What is the interest yield also known as?

Answer 1

Income Yield
Running Yield
Flat Yield

Question 2

What does the interest yield tell us?

Answer 2

It is the annual income from a bond expressed as a percentage of the price paid. It takes account for any gain/loss if held to redemption.

Question 3

What is interest yield formula?

Answer 3

Coupon x 100/clean price

Question 4

What does the gross redemption yield tell us?

Answer 4

Tells us the return yield on a bond that takes into account the interest yield and what the gain/loss would be at maturity

Question 5

What is the gross redemption yield formula?

Answer 5

Interest yield + or - gain/loss to maturity/number of years to maturity
/
Clean price
X100

Question 6

Name the key risks associated with fixed Interest Securities (5)

Answer 6

Default Risk
Inflation Risk
Interest Risk
Currency Risk
Liquidity Risk

Question 7

The terms GILTS is short for?

Answer 7

Government Invested Long Term Security