Definition of Bond yield:
When investors buy bonds, they essentially lend bond issuers money. In return, bond issuers agree to pay investors interest on bonds through the life of the bond and to repay the face value of bonds upon maturity. The simplest way to calculate a bond yield is to divide its coupon payment by the face value of the bond. This is called the coupon rate.
Income earned from a bond. Where the bond pays periodic interest, it equals the interest collected. Where a bond is sold at a discount on the par value, it equals the difference between the purchase price and amount received on bonds maturity date.
Bond yield is the return an investor realizes on a bond. The bond yield can be defined in different ways. Setting the bond yield equal to its coupon rate is the simplest definition. The current yield is a function of the bond's price and its coupon or interest payment, which will be more accurate than the coupon yield if the price of the bond is different than its face value. More complex calculations of a bond's yield will account for the time value of money and compounding interest payments. These calculations include yield to maturity (YTM), bond equivalent yield (BEY) and effective annual yield (EAY). (Discover the difference between Bond Yield Rate vs. Coupon Rate).
How to use Bond yield in a sentence?
- If you can pick the right type of investment then you may be able to get a nice bond yield as your payoff for picking well.
- If you can get the right investment going sometimes you can get a really nice payday from the bond yield .
- The bond yield was really good and I was just glad that it was finally over and we could move on with our business.
Meaning of Bond yield & Bond yield Definition