Interest-On-Interest
网友投稿• 2022-01-05 15:58:18 •阅读72
The interest that is earned upon the re-investment of interest payments. Interest-on-interest is primarily used in the context of coupon paying bonds, where all coupon payments are assumed to be re-invested at some interest rate and held until the bond matures, or when the bond is sold. |||Interest-on-interest is an important consideration an investor must make when analyzing potential investments, as interest-on-interest must be considered when forecasting an investment's total cash return.For simplification, the interest rate used to calculate interest-on-interest can be the bond's yield at the time the coupon payment is made.
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