realjidejamal:


Amen!
Thank you TONY56

I read everything regarding that and I'm glad my situation help us all to gain more experience about termination.
This whole thing has really made me to pay more attention to terms and conditions too.
Regards!

Pls what did he mean by the rate it was purchased/sold. Is he talking abt the actual interest rate?

Does it mean if i purchase t bills with a discount rate of say 10%, i can sell this same t bills to the bank at a different rate of say 12% if that is the prevailing rate.

Also does the T bills rate actually change everyday?

Thanks

haibe:


Is this really the effective yield for a 1 year period? If interest on t bills are indeed paid upfront (when you place the investment); then this gives an advantage such that the interest received upfront can be reinvested.

In other words my own calculation of the yield to maturity will go this way.

Yr 0: CF: (6,880,000) + 1,120,000
Yr1: CF: 6,880,000

My financial calculator tells me the effective interest rate is actually 19.4%

Can someone correct me pls?

Thanks

The formula for effect yield is. 1/(1-rate). This has been discussed here on several occasions. 1/(1-0.14)=16.2791.

TONY56:


Very beautiful!!!
I also rejoice with you and wish you well this year.

There's one thing that you may also not realise that you did to a lot of people on this thread-
You were the person who made many to know that Union Bank Charges 25% of the upfront interest for termination of TBs.
You equally made some of us on this thread to be able to prove to doubting Thomases that it's actually possible to gain by terminating TB depending on the rate it was purchased vis-a-vis the rate it's sold.

Happy new year!

The last part was MEEEE

BBFE:


The formula for effect yield is. 1/(1-rate). This has been discussed here on several occasions. 1/(1-0.14)=16.2791.

Oh thanks. I see we have a different definition of what effective interest rate is. The 16.2% using that method is simply the current yield and nothing more; its the same as simply dividing the interest over the amount invested. i.e (ROI) (1120/6880).

From my understanding in finance, i will say several factors affect what your effective yield is; the basic one's are the issue price (the 6880k invested), the interest rate of 1120k, the redemption amount of 6880k and more importantly the timing of these cash flows. The fact that interests are paid upfront will significantly affect the yield to maturity/effective yield than if they were paid, say at the end of the first year when the investment matures. The concept of time value of money is very key to determining the yield to maturity and thus will be the reason why i am getting 19% and not 16%. It may be fine to base investment decisions based on current yield like you have done especially if you dont plan to roll over the interest payment/reinvest in a different source ; if you do, then time value of money becomes important and the yield to maturity should be used in making the decision rather than a mere ROI.

You are getting 19% because your cash flows are incorrect.

At the time of investment (what you call yr 0, the cash flow if -6,668,000. The upfront interest is already accounted for in that number (i.e. 6,880,000=8,000,000 - (8,000,000* 14% [this is upfront interest]).

At maturity (yr 1), you get the face value of 8,000,000 and not 6,880,000.

If you calculate the IRR based on these cash flows you should get back to the right number.

haibe:


Oh thanks. I see we have a different definition of what effective interest rate is. The 16.2% using that method is simply the current yield and nothing more; its the same as simply dividing the interest over the amount invested. i.e (ROI) (1120/6880).

From my understanding in finance, i will say several factors affect what your effective yield is; the basic one's are the issue price (the 6880k invested), the interest rate of 1120k, the redemption amount of 6880k and more importantly the timing of these cash flows. The fact that interests are paid upfront will significantly affect the yield to maturity/effective yield than if they were paid, say at the end of the first year when the investment matures. The concept of time value of money is very key to determining the yield to maturity and thus will be the reason why i am getting 19% and not 16%. It may be fine to base investment decisions based on current yield like you have done especially if you dont plan to roll over the interest payment/reinvest in a different source ; if you do, then time value of money becomes important and the yield to maturity should be used in making the decision rather than a mere ROI.

WhiteChocolate:
The last part was MEEEE

True that was you

katamo:
You are getting 19% because your cash flows are incorrect.

At the time of investment (what you call yr 0, the cash flow if -6,668,000. The upfront interest is already accounted for in that number (i.e. 6,880,000=8,000,000 - (8,000,000* 14% [this is upfront interest]).

At maturity (yr 1), you get the face value of 8,000,000 and not 6,880,000.

If you calculate the IRR based on these cash flows you should get back to the right number.

Oh if I get u correctly; the upfront interest is in form of a discounted amount to your investment, not like you are receiving it as an actual cash on that day?

If this is the case, does it not mean we actually get the interest on redemption rather than upfront? As in i invest 6680 and get 8000 in 1 year time, the interest is effectively in one yr time too?

haibe:


Pls what did he mean by the rate it was purchased/sold. Is he talking abt the actual interest rate?

Does it mean if i purchase t bills with a discount rate of say 10%, i can sell this same t bills to the bank at a different rate of say 12% if that is the prevailing rate.

Also does the T bills rate actually change everyday?

Thanks

Yes.
The TB rates changes daily at the secondary market depending on the prevailing primary rate, demand and availability. But mind you, you can only make profit if you sell at lower rate to the rate you bought. If you sell at higher rate, you get less.

Before you start asking me how, go to page 436 and few pages before that page for better understanding on how and why it's so

WhiteChocolate:
The last part was MEEEE

You said it o. Not me.
Brother, it is well with you and me.
Happy new year as we all learn everyday

ositadima1:
Let me clear d air a little.

what CBN quote are discount rates, with these u can compute true yield;

True yield = (discount rate * 100)/(1 - discount rate)

eg, for discount rate of 17.4% u get (0.174 * 100)/(1 - 0.174) = 21.1% , this is d ROI on ur true principal.

True principal is the real money u are investing.

True principal = apparent principal * (1 - discount rate)

eg, for discount rate of 17.4%, apparent principal of 10m (the available money in ur account)
True principal = 10m * (1 - 0.174) = 8.26m

In other words u invest 8.26m to make 10m at end of tenure, a 21.1% ROI.

@bolded

So basically i am getting the interest (10m - 8.26m) at the end of the tenure right?

Begining if tenure i pay 8.26m
End of tenure i get 10m

Is this correct?

[quote author=realjidejamal post=63971792]Happy New Year Everyone!

I am the guy who wanted to terminate his Union Bank Treasury Bill Investment late last year. This is to inform everyone that I didn't later terminate the TB as I decided to source for funds else where.
However, I approached the bank for a loan during that time using one of my TB as collateral but the interest % with term and condition made me run for my dear sweet life. I was offered 26% interest on the loan which I will be servicing every month and if I failed to fund my account for them for the deduction every month, they will deep there hands into my TB and converted it into FD so they can service the loan. They are seriously mad ooo. Can you all imagine that cruelty. Well I ran for my dear life and decided not to proceed with the loan and the TB termination. I later persuaded a friend who owe me to help by paying his loan which he did and my money problems was taken care of though not all but it helps and my . AMEN . THANK'S .

Market Anticipate N309.1b Maturing Bills as Yields Expected to Drop
https://www.businesspost.ng/2018/01/08/market-anticipate-n309-1b-maturing-bills-yields-expected-drop/

Qfac Pick of the Week: United Bank for Africa (UBA) Plc
https://www.businesspost.ng/2018/01/08/qfac-pick-week-united-bank-africa-uba-plc/

Dangote Cement Shares Fall Amid Dispute With BUA Cement
https://www.businesspost.ng/2018/01/08/dangote-cement-shares-fall-amid-dispute-bua-cement/

Just got 13.45% from first bank for 143days. Account debited, interest yet to drop.

When did you get from Them?

GODAKPAN:
Just got 13.45% from first bank for 143days. Account debited, interest yet to drop.

About an hour ago, over 10m still available

GODAKPAN:
Just got 13.45% from first bank for 143days. Account debited, interest yet to drop.

Access is giving 11 percent for the same period

I know naaa. I want him to answer the questions so he can technically expose his scam

Pharmtj:
abeg forget that guy joor

Yes, you get cool 10m cowries if you did not terminate before maturity

haibe:


@bolded

So basically i am getting the interest (10m - 8.26m) at the end of the tenure right?

Begining if tenure i pay 8.26m
End of tenure i get 10m

Is this correct?

As the TB rates are declining, I think it will be wise to diversify may be put a little into Cryptocurrency. I will recommend Ethereum.

bendo75:
As the TB rates are declining, I think it will be wise to diversify may be put a little into Cryptocurrency. I will recommend Ethereum.

Err.....who asked you?

ozymes:
Yes, you get cool 10m cowries if you did not terminate before maturity

why then do people callthe interest an upfront interest

Forex and liquidity boom is a cycle. Do not burn your finger. All my almost 11 years career in banking without clear understanding of TB is really regrettable. But since late 2016 that mua tumbled on this thread. Do you want to ask me my candid opinion? the security of my hard earned capital is key.whatever returns I get from CBN/FGN TB? I remain with TBs.

bendo75:
As the TB rates are declining, I think it will be wise to diversify may be put a little into Cryptocurrency. I will recommend Ethereum.

ozymes:
Forex and liquidity boom is a cycle. Do not burn your finger. All my almost 11 years career in banking without clear understanding of TB is really regrettable. But since late 2016 that mua tumbled on this thread. Do you want to ask me my candid opinion? the security of my hard earned capital is key.whatever returns I get from CBN/FGN TB? I remain with TBs.

I am with you bro. Crypto is not for the faint-hearted. Crypto has lots of volatility but thanks to Feelamong for introducing it here last year. After weeks of research about Crypto, I decided on Ethereum with what I can afford to lose. I agree you invest 100% in TB if you don't have balls of steel. Peace

Because the transaction in -principle is discounted sir

haibe:
why then do people callthe interest an upfront interest

After all said and done: I nor fit shout! Na so we dey talk am for waterside.

bendo75:


I am with you bro. Crypto is not for the faint-hearted. Crypto has lots of volatility but thanks to Feelamong for introducing it here last year. After weeks of research about Crypto, I decided on Ethereum with what I can afford to lose. I agree you invest 100% in TB if you don't have balls of steel. Peace

Good morning sir, i am ebenezer, please sir i dnt really want to bother u with this but have no choice, i recently gained admission into fed poly ado, but things has been a little hard for my parent now, please i need a financial support, no amount is too small, i have not paid my school fees 28,050 also my house rent 11,000, please no amount is too small may God bless you, your family thanks, my account details are below
oluwatunmise ebenezer 0058986339
union bank

Rates Remain High as T-Bills Market Bearish on Tight Liquidity
https://www.businesspost.ng/2018/01/09/rates-remain-high-t-bills-market-bearish-tight-liquidity/

Stock Recommendation for the Week (January 8, 2018)
https://www.businesspost.ng/2018/01/09/stock-recommendation-week-january-8-2018/

Hello guys,

I just bought TB from Stanbic's secondary market. I am yet to receive my alert, but I want to know if the secondary market works like the primary, such that I get the interest upfront?

purplerain:
Hello guys,

I just bought TB from Stanbic's secondary market. I am yet to receive my alert, but I want to know if the secondary market works like the primary, such that I get the interest upfront?

It works the same; exercise some patience.

Got alert yesterday @ 13.35% for 187 days. Stanbic