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
A lender can be a private individual, a private or public group, or an institution that loans funds to a person or business that the lendee would later repay with interest in most cases. In ...
To pass property by will to an heir. Strictly speaking, real estate cannot be bequeathed to an heir, it must be devised. However, if it becomes clear the purpose of the testator was to ...
The term lock-in clause is used in an agreement that prescribes a period of time within which either of the parties that signed a contract cannot terminate the contract. In case one of the ...
Arrangement whereby a party providing financing gets a portion of the ownership. ...
Average of income, retail revenue, and population of a locality as a percentage of the entire United States. It reflects the economic status of a particular region. ...
For real estate investors, the vacancy and credit loss is a way to determine a property’s potential for profit. This value is determined by subtracting the losses brought by vacant ...
Payment received after the due date. A penalty and/or interest may be charged on such payment. For example, a bank may charge a penalty of $25 if a mortgage payment is received after the ...
Drain facility usually underground for waste and water disposal consisting on connected pipes. ...
Regulation of the Securities and Exchange Commission (SEC) establishing the criteria to avoid a private offering. For example, John wants to sell shares in an apartment house to several ...
Have a question or comment?
We're here to help.