Effective Annual Yield
Definition of "Effective annual yield"
Real rate of interest on a loan. It is the coupon rate divided by the net proceeds of the loan. Assume Sharon took out a $1,000,000, on year, 10% discounted loan to buy real estate. The effective interest rate equals: in this discount loan the proceeds received is only $900,000, which effectively increases the cost of the loan. The effective annual yield, also called the annual percentage yield (APY). Different kinds of investments have different compounding periods. For example, some banks pay interest quarterly. If an investor wants to compare investments with different compounding periods, she must place them on a common basis. It is used for this purpose and is computed as follows.
Popular Real Estate Terms
The prepared form used to specify the terms of the listing contract. Usually a listing form consists of blanks the real estate agent fills in to provide the necessary information needed to ...
lender who charges an exorbitant interest rate, which is typically illegal because it exceeds the interest rate allowed in the state. A borrower may go to a loan shark if he cannot obtain ...
House designed and zoned for one-family use. Other dwellings may be attached to a single family dwelling, but do not share the same plumbing, heating, or electrical system. Single family ...
A loan in which the entire charge is subtracted up front from the face value of a loan. The proceeds received are the face value of the loan less this deduction, which increases the ...
Business organized as a distinct legal entity with ownership evidenced by shares of stock. To form a corporation, "articles of incorporation" must be filed with the state. When approved, ...
Federal tax legislation notably establishing 10% withholding on interest and dividends. ...
Organizational governing group. Either an appointed or elected body overseeing the management of an organization and rendering advice on current issues. Members are legally responsible for ...
Intermediate - to long-term collateralized loan granted to a business by a commercial bank, insurance company, or commercial finance company such as to finance the purchase of real ...
Partially amortized and requiring a lump sum (balloon) payment at maturity. ...
Have a question or comment?
We're here to help.