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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Yield

Definition:

The percentage rate of return on a bond given the price paid for the bond. For example, if investors were nervous about a $500,000 par value bond which had a stated yield of 8% of 40,000 per year in coupons, that bond would trade at a discount. Let’s say instead of $500,000 people were only paying $400,000. Yet the bond is still paying $40,000 in interest. The bond has an effective yield of 10%.

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