Question

Hello, I need help on how to find the bond yeild?

Answer 1

A bond yield is the amount of return an investor will realize on a bond. Though several types of bond yields can be calculated, nominal yield is the most common. This is calculated by dividing amount of interest paid by the face value.

Answer 2

First thank you for the reply! (also a heads up, i'm very slow when it comes to math and i get mixed up alot so sorry in advance)
so if I have a US Treasury Bond and the interest Rate is 1.375% and the bond value (also the bond price) is $1,500 would i first find out what 1.375% of 1,500 = 20.7 then divided that by 1,500???

Answer 3

I'm doing a portfolio and its asking for the final investment value rounded , however if the bond is stable then i'm supposed to calculate the bond yield and i went back to look on how to do that but i can't find anyting

Answer 4

what do you mean 1.375% of 1,500

Answer 5

Isn't that the coupon amount, or is the interest rate different? or am I putting in a an extra step...

Answer 6

umm is 1.375% a coupon amount

Answer 7

@imqwerty

Answer 8

I hope you don't mind if i attached a file so you can see what i'm looking at, and it say's interest rate but i wasn't sure to use it as a coupon or not.

Answer 9

I understand that i need to use the bond value ($1,500) but i'm not quite sure on how to find the interest paid so I can find the yield...

Answer 10

Heres an example: a $1,000 face value bond has a coupon interest rate of 5%. No matter what happens to the bond's price, the bondholder receives $50 that year from the issuer. However, if the bond price climbs from $1,000 to $1,500, the effective yield on that bond changes from 5% to 3.33%. If the bond price falls to $750, the effective yield is 6.67%.

Answer 11

Conversely, a bond with a higher coupon rate than the market rate of interest tends to raise in price. If the general interest rate is 3% but the coupon is 5%, investors rush to purchase the bond to achieve a higher return on their investment. This increased demand causes bond prices to rise until, other things being equal, the $1,000 face value bond sells for $1,666.

Answer 12

Thank you for your help!!! :)
I feel confidant, So i'm going to close this question!

Answer 13

ok your welcome

Answer 14

but don't I'm mart I'm actually struggling in math too lol

Answer 15

*smart