Sources of return, Financial Management

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When an investor invests in fixed income securities, he receives returns from one or more of the following sources:

  • Coupon Interest payment.

  • Capital gain (or loss) when security matures, or is called or sold.

  • Interest received on the reinvested interim cash flows.

All these three sources of return from a fixed income security are to be considered while calculating the potential return using a yield measure.


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