How Do You Calculate The Yield Of A Bond?
Yield is an important piece of information to have when you are comparing a bond to other potential investments. Yield is the rate of return that you get with a bond. What a bond pays and the exact amount you can earn depend on variables such as the bond’s price, coupon rate, maturity date and current interest rates. Know the current price of the bond. Bond prices change every day, just as they do for stocks and every other publicly traded security. You don’t have to hold a bond until maturity. It can be traded on the public market like other securities. Learn what different types of bond yields mean. You can find a brief explanation at Moneyinstructor.com (see Resources below). There are several ways to calculate the yield of a bond and each will give you a different figure. Know the bond’s coupon, or stated interest rate. This is helpful when comparing your current yield to the actual yield you will realize with a potential investment. Get the bond’s maturity date and calculate how m
