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Nominal yield

Category — Analytical Metrics
Nominal yield (NY (NYC/NYP)) is the rate of return with monthly/quarterly/semi-annual compounding. This approach is used in US, UK, Canadian, German, Australian, Indian, French, Swiss, Portuguese, South African, Finnish, and Polish markets as well as in some other countries.

When the bond’s at par price and ACI = 0, = 0, nominal yield will be equivalent to the coupon rate.

The NY will be lower than the corresponding YTM - a shorter compounding period (more frequent) leads to a lower internal rate of return required for bond payments.

For zero-coupon bonds, NY and YTM are equivalent.

NY is calculated for issues with the cash flow fully determined until the redemption date. NYP/NYC is calculated for issues with the non-executed offer and partially determined cash flow.

More information about yield calculation and example of calculations you can find in Bond Calculator Guide.
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