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Bond Yield

The yield is effectively the interest rate on a bond. The yield will vary inversely with the market price of a bond. When bond prices are rising, the yield will fall. When bond prices are falling, the yield will rise. It is important to understand that the yield on a bond is set by the financial markets and not by a country’s central bank.

A bond yield is the return on investment for a bond, typically expressed as an annual percentage rate. It is calculated by taking the annual interest payment on a bond and dividing it by the bond's face value or current market price. Bond yields can also be expressed as the yield to maturity, which is the total return on a bond if it is held until it matures.

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