Investing term

What is Yield?

The effective return a bond pays right now, given its market price — not its coupon alone.

Yield is the effective return a bond pays right now given its current market price — not just its fixed coupon. Because a bond's price moves while its coupon stays fixed, the yield rises when the price falls and vice versa. Yield lets you compare the real income from bonds trading at different prices, which the coupon alone can't tell you.

For example

A bond with a $50 coupon trading at $1,000 yields 5%, but if its price drops to $900 the same $50 coupon is now a 5.6% yield.

Yield is taught hands-on in Stage 4 — Stocks, Bonds, Cash & Alternatives.

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Related terms

AlternativesInvestments outside the core stocks/bonds/cash mix — REITs, commodities, gold, crypto.BondA loan from you to an issuer (government or company), repaid with interest on a known schedule.Capital gainThe profit from selling an investment for more than you paid.CommodityA raw physical good like gold, oil, wheat, or copper — priced by the ounce, barrel, or bushel.
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