Yield: key bond terms

Yield is probably the penultimate entry in any list of key bond terms. The ultimate term being zero coupon, as explained in the entry 'Coupon' in this section of the bonds investment articles.

When you purchase bonds, you will of course be very interested in the return that you get on them. This return is calculated by a few factors: the price of the bond (note that they can sometimes be bought at a discount to their face value, e.g. zero coupon bonds). Another key factor is of course the coupon - the interest paid on the bond - and also when it matures. As noted elsewhere, the further off the maturity date, so the longer the term of the bond, the higher the rate of return will be to compensate for the additional risk held by the bondholder.

You will often see the term YTM and this refers to Yield to Maturity, also called by some the GRY or Gross Redemption Yield. This is the standard measure used to assesss what the return on a particular bond product will be.

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Yield: key bond terms

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