Effective Rate Of Return
Definition of "Effective rate of return"
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
Expected selling price of property less costs to sell. It is the net amount received upon the sale of property. gross receivables less allowance for doubtful accounts, representing the ...
Member of a partnership whose liability for partnership debts is limited to the amount invested in the partnership. A limited partner is prohibited from taking active part in the management ...
A right or interest in property held by a third party, which often limits the use and diminishes the value of the property, but usually does not prevent the transferring of title. The more ...
The term effective interest rate is the actual return from a savings account or any investment where you pay interest when considering the effects of compounding costs over time. Through an ...
If you came here looking for the Sublease definition, chances are that you know what it means, but you need more information about it, with scenarios and facts to better grasp it. ...
An income feature added to a mortgage whereby the mortgagee earns income in addition to the mortgage interest and principal payments. Also called an equity kicker, a kicker allows the ...
Six-mile-wide column of land running north-south in rectangular survey system ...
Tax deduction permitted upon the transfer of property from one spouse to another. The deduction is allowed under the federal gift tax for lifetime transfers or under the federal estate tax ...
Gets rid of unwanted substances and materials from a residence or office building. Waste includes solids and liquids, hazardous and nonhazardous materials. ...
Have a question or comment?
We're here to help.