Friday, July 29, 2005

YIELD
The yield is the return on an investor's capital investment. For bonds, it is the coupon rate of interest divided by the purchase price, called current yield. Also, the rate of return on a bond, taking into account the total of annual interest payments, the purchase price, the redemption value, and the amount of time remaining until maturity.

YIELD TO MATURITY
The total yield on a bond obtained by equating the bond's current market value to the discounted cash flows promised by the bond.

YIELD TO CALL
The percentage rate of a bond or note, if you were to buy and hold the security until the call date. This yield is valid only if the security is called prior to maturity.
Generally, bonds are callable over several years and normally are called at a slight premium. The calculation of yield to call is based on the coupon rate, length
of time to the call and the market price.


YIELD TO WORST
The bond yield computed by using the lower of either the yield to maturity or the yield to call on every possible call date.

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