Forum Archive Index - June 2003

[John H T Wilkinson <jhtw@clear.net.nz>]

Title: Memo

You should not subtract the brokerage when calculating cost.

----- Original Message -----

From: Peter Hargraves

To: sharechat@sharechat.co.nz

Sent: Monday, June 30, 2003 11:16 AM

Subject: [sharechat] Capital Notes & yeild

 

 Can someone help me with the calculation of the return or yield from a capital notes purchase?

 

Details:

 

Face value $30,000 at 8.5% yield.

 

Total purchase cost is $30,351.70

 

Advised this includes $103.94 accrued interest plus $248.68 brokerage at a "net return" of 8.37%

 

No way can I make these figures add up.

 

If I subtract the accrued interest & the brokerage I get $29,998.64 paid for a note that has a face value of $30,000 at 8.5%. Surely my return is greater than 8.5%??

 

How does this work?What am I missing?

 

Regards

Peter H.