Question about Gilts Interest payments

PAMDILL
PAMDILL Registered Posts: 721 ? ? ?
I have to sit unit 15 on Saturday to get it down to Eagle before the 30th and avoid having to sit it under the new standards. Leaving just Audit to get MAAT.

However I am really struggling with Gilts.

If a company buys the gilts on market at above face value and keeps them for 4 months do they receive any of the annual interest or is any profit purely from then selling them at more than they paid?

I don't see how they can get back more than they paid if base rate remains the same as there would be 4 less month until the redemption date, however there is no mention in my ext book as to how the annual interest is paid, whether it is paid monthly, quarterly or annually.

Comments

  • stevef
    stevef Registered Posts: 258 ? ? ?
    Whoever is holding them at the coupon date receives the interest, the price paid should reflect a nominal interest apportionment.
  • PAMDILL
    PAMDILL Registered Posts: 721 ? ? ?
    Do you mean the annual anniversary date or the redemption date?
  • stevef
    stevef Registered Posts: 258 ? ? ?
    The Gilt should state the date when interest payments are due (in pre historic dates they used to have tear off coupons that had to be handed in to get the interest, hence references to coupon dates and coupon rates). Interest is usually paid half yearly with the first payment being made 6 months after issue, and then every 6 months thereafter.

    So, if a Gilt is initially issued by the Government on and is dated, say 1 June, usually, whoever is the registered holder on each 30 November and each 31 May will receive 6 months interest until the Gilt matures.
  • PAMDILL
    PAMDILL Registered Posts: 721 ? ? ?
    Okay, thanks
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