BBYB

Hello - Bought some BBYB today at a total price of 109. I think the yield comes out at a bit above 5%. Am I about right please?

Comments

  • If the total price is 109 inclusive of dealing, stamp duty etc. I make it an IRR of 5.34%
  • Yes, 109 including all costs. Thank you Laughton. I came out around there and was content with that for a 15 months risk on BB. Thank you again. D
  • Of course, YTM is a lot lower @ 3.456%. But still, better than sitting doing nothing.
  • Absolutely! Not bad given the period and the risk. Thank you again.
  • I am getting a YTM of around 5.26% inc Stamp Duty and Dealing costs - can't yet see where I have gone wrong ??
  • Wozzitworth - I wish I hadn't read your post before going to bed. I woke up worrying about percentages.

    Is that a straight yield ignoring time? So, 5.26% for the remaining 1.28 years rather than an annual yield?
  • Its very confusing. My spreadsheet gives 3.46% using the MS Excel Yield function which does not make sense to me. If I use XIRR it returns 5.38% both ignoring dealing and stamp duty, I think this is the more accurate as it takes account of the precise timing of cashflows. My crude manual calculations always align more closely with the later.
  • I'm just wondering if the Excel YTM formula is taking account of the accrued interest which would have to be paid for if this was a bond and that effects the YTM value? BBYB is a pref so there is no accrued.

    The Yield Calculator on this site gives a YTM of 3.47% using a price of 109p

    I've tried doing it manually and come up with annual YTM figure lower than 3.46%.

    But I'm satisfied that the IRR is correct at more than 5% and am happy with that.

    Come on - surely there is a mathematician out there that can give us the definative way to calculate the YTM on a pref.
  • Sorry for my sonambulistic post.

    I just used the XIRR function in Open Office - but I assumed that the price I paid includes any accrued (which I think in a perfect world is correct ), and added stamp duty and dealing cost to that

    I also usually do a ball park check by working out the effective percentage annual loss due to the capital loss and subtracting this from the yield - which I think is similar to what Beekey does.

    So in this case, a capital "loss" of roughly 8% over approx 1.25 years is 5.3%.

    Running yield is 10.375% - approx YTM 5%
  • Just seen this. I could relate to both figures. I used the calculator on this site and it produced 3.45%. Thought this was a bit low so did rough calculation on a purchase of £5,000 nominal @ 109, all up cost £5,450. Interest comes to £806.25 less the capital loss of £450 gave £356.25 net over about 15 months so about £285 p.a. on £5,450 gave 5.23%. One year fixed can earn about 2% so I was happy with 3.45% for 15 months and even happier if it is 5% plus. Long while since I have done this sort of calculation but hopefully it is close enough. Think the outlook on BB for 15 months is all acceptable. Thank you Wozzit, thank you Laughton.
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