Yield

Glossary

Banking

Yield

A bond’s yield is the return it offers to bondholders; thus a bond’s current yield is calculated by dividing a bond’s market price by its coupon. A bond paying a 5% fixed coupon that is trading in the market at 104 has a current yield of 4.81%. Equity yield is calculated either by adding dividend income to the price increase between the entry price and the current price and dividing by the entry price; or alternatively by dividing the sum by the current price.

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