Discount Yield
What is Discount Yield? Discount yield is the expected annual percentage rate of return earned on a bond when it is sold at a discount on its face value. The discount yield is also popularly referred to as the bank discount yield (BDY). How is the Discount Yield Calculated? Discount yield is calculated as follows:...
Call Protection
What is Call Protection? Call protection refers to protection from investment risk to bond investors that exists by limiting the conditions under which a bond issuer may elect to call, i.e., redeem bonds before a bond’s stated maturity date. A call protection provision in a bond’s indenture, which outlines all the terms of the bond,...
Call Provision
What is a Call Provision? A call provision refers to a clause – essentially, an embedded option – in a bond purchase contract that gives the bond’s issuer the right to redeem the bond early, before its maturity date. Call provisions may also exist with preferred stock shares but are most commonly associated with bonds....
Call Risk
What is Call Risk? Call risk is the risk for a bond buyer that exists in purchasing a callable bond. The chance that the bond may be redeemed (i.e., called) before its scheduled maturity date represents an investment risk for the buyer, as it can result in them earning less from their bond purchase investment...
Economic Value of Equity (EVE)
What is the Economic Value of Equity (EVE)? The economic value of equity (EVE) is a long-term economic measure/indicator of net cash flow. The EVE is calculated by taking into account the present value of all asset cash flows and subtracting the present value of all liability cash flows. In other words, it is the...
