BOND YIELD Meaning and
Definition
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Bond yield refers to the return an investor receives from owning a bond. It is a measure of the income generated by the bond in relation to its price. Typically expressed as a percentage, the bond yield indicates the annualized return an investor can expect to earn by holding the bond until maturity.
The bond yield is primarily influenced by the bond's coupon rate and its market price. The coupon rate is the fixed interest rate paid periodically by the bond issuer to the bondholder, expressed as a percentage of the bond's face value. As the bond price fluctuates in the secondary market, the yield adjusts accordingly.
Bond yields play a crucial role in assessing the attractiveness of a bond investment. Higher yields indicate higher returns, making them more appealing to investors seeking income. Conversely, lower yields may discourage investors, as they offer comparatively lower returns. Bond yields also reflect the risk associated with a bond; riskier bonds tend to offer higher yields to compensate investors for taking on greater potential losses.
Understanding bond yields helps investors evaluate bond investments in comparison to other fixed-income options, such as savings accounts or certificates of deposit. Bond yields vary based on factors like prevailing interest rates, credit quality of the bond issuer, and the time remaining until bond maturity.
In summary, bond yield represents the return an investor can expect to earn from holding a bond until it matures, and it is influenced by the bond's coupon rate, market price, and associated risks.
Common Misspellings for BOND YIELD
- vond yield
- nond yield
- hond yield
- gond yield
- bind yield
- bknd yield
- blnd yield
- bpnd yield
- b0nd yield
- b9nd yield
- bobd yield
- bomd yield
- bojd yield
- bohd yield
- bons yield
- bonx yield
- bonc yield
- bonf yield
- bonr yield
- bone yield
Etymology of BOND YIELD
The term "bond yield" originates from the combination of two separate words: "bond" and "yield".
1. Bond: The word "bond" comes from the Middle English word "bonde" or "band" which means a legal binding or obligation. It further traces its origins to the Old English word "bindan" meaning "to bind" or "to tie". In the context of finance, a bond is a fixed-income security that represents a loan made by an investor to a borrower, typically a government or a corporation.
2. Yield: The word "yield" comes from the Middle English word "yelden" or "yeld" which means "to give way" or "to produce". It is derived from the Old English word "gieldan" which means "to pay or give in return".
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