What is an indicated yield?

This is sometimes referred to as the Indicated Distributions or Interest. This section of the prospectus describes the interest to be paid by the trust and the payment intervals. In this section investors will also find a description of future changes to the interest formula and the date for those changes. For example, the capital trust security may pay an initial fixed interest rate for the first five years and then the payment may revert to a formula based upon a standard short-term interest rate – the Interest Reset may be calculated based upon the Government of Canada Yield plus some percentage. When purchasing existing capital trust securities, investors should fully understand the potential interest yield changes. There is nothing more disappointing to purchase an investment described as a 7.802% capital trust security only to fine that the rate is to be reset lower in six months.

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