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Glossary

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Yield
The annual percentage rate of return earned on a bond calculated by dividing the coupon interest by its purchase price.
Yield burning
In a refunding, the practice of a dealer marking up the price of the securities to be put in an escrow, in order to "burn the yield down" to levels that do not violate federal arbitrage regulations. Yield burning has a negative connotation.
Yield curve
A line tracing relative yields on a type of bond over a spectrum of maturities ranging from three months to 30 years.
Yield spread
The difference in yield between two bonds or bond indexes.
Yield to call
The yield on a bond calculated by dividing the value all interest payments that will be paid until the call date, plus interest on interest, by the principal amount received on the call date at the call price, taking into consideration whatever gain or loss is realized from the bond at the call date. Example: You pay $900 for a five year bond with a face value of $1000. The bond pays an annual coupon of ten percent. This bond is called at year three for $1,100. The yield to call of this bond is 18.4 percent. This reflects the three years of coupon payments and the difference between the price paid and the call price. Had the bond not been called, the yield to maturity would have been 12.8 percent. Bond calculators are available on this website, www.investinginbonds.com.
Yield to maturity
The yield on a bond calculated by dividing the value of all the interest payments that will be paid until the maturity date, plus interest on interest, by the principal amount received at the maturity date, taking in to consideration whatever gain or loss is realized from the bond at the maturity date. Example: You pay $900 for a five year bond at a face value of $1000. The bond pays an annual coupon of ten percent. Here the yield to maturity is 12.8 percent. This reflects the coupon payments and the difference between the price and the face value of the bond. Bond calculators are available on this website, www.investinginbonds.com.
Yield to worst
This is the lowest yield generated, given the potential stated calls prior to maturity.
Yield
The actual return on a debt security if it is held to maturity.
Yield beta
A measure of the sensitivity of a bond’s yield to a general measure of bond yields in the market that is used to refine the hedge ratio.
Yield curve
The relationship between yield and time to maturity.
Yield curve risk 
Risk related to changes in the shape of the yield curve.
Yield spread
The difference between the yield on a bond and the yield on a default-free security, usually a government note, of the same maturity. The yield spread is primarily determined by the market’s perception of the credit risk on the bond.
Yield to maturity
The annual return that an investor earns on a bond if the investor purchases the bond today and holds it until maturity.
Yield to worst 
The yield on a callable bond that assumes a bond is called at the earliest opportunity.
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