ISMA Return

International standard for evaluating the real interest return on bonds in which interest is compounded on a daily basis.

The ISMA return (formerly known as AIBD return) determines the real interest return on bonds by compounding interest on a daily basis. Irrespective of the time at which the interest is credited, the interest that has accrued on a given day is added to the principal, itself bearing interest the following day.

In Germany, regulations on the real interest return are regulated in the Charges Disclosure Rule (Preisangabeverordnung).

AIBD stands for "Association of International Bond Dealers", the former name of ISMA (International Securities Market Association). On the Frankfurt Stock Exchange, real interest returns on bonds are calculated in accordance to the ISMA standard.

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