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What is the Canadian yield called?

What is the Canadian yield called?

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Asked by Leo, Last updated: Sep 13, 2020

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

The canada yield call is the calculated call price of a bond based on a yield equal to an equivalent-term government of canada bond plus an additional amount of yield added on. For example, if the equivalent-term government of canada bond has a yield of 5% and the canada yield call requires the issuer to add an additional 0.50% to the yield, the issuer would call back their bond at a price based on a yield of 5.50%. Ayield spread is simply the difference between two yields. if an issuers 7% coupon bond is issued at par (i.e., the yield is 7%) and the canada yield call is 5%, the spread between these two yields is 7% - 5% = 2% or 200 basis points. The +50 in your text refers to adding 50 basis points to the yield. a basis point is one one-hundredth of a percentage point. therefore, 50 basis points would be equal to 0.50% (50 / 100 = 0.50%). Adding 50 basis points to 5%, for example, would be 5.50% (5% + 0.50% = 5.50%).

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