Bonds, Cash & Savings
What Are Bond Yields? Coupon, Current Yield and Yield to Maturity Explained
A bond yield is the return an investor earns on a bond, expressed as a percentage. The coupon yield is the fixed payment as a share of face value; the running yield divides the coupon by the current price; and the yield to maturity is the total return if the bond is held to redemption.
1
Coupon (nominal) yield - The fixed annual coupon as a percentage of the bond face value (nominal...
2
Running / current yield - The annual coupon divided by the current market price. It moves as the...
3
Yield to maturity (redemption yield) - The total annual return if you buy at the current price and...
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Price and yield move inversely - For a fixed set of cash flows, paying a higher price lowers the...
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