InvestmentFinancial Glossary
Bond Yield
Definition
The return an investor earns on a bond, expressed as an annual percentage. Yield can be calculated as current yield (annual coupon divided by current market price) or yield to maturity (total return if held until maturity, factoring in coupon payments, face value, and time remaining).
Why It Matters
Bond yields move inversely to bond prices. When RBI raises interest rates, existing bond prices fall and yields rise. This affects NAVs of debt mutual funds. Understanding yield movements helps you time entries into debt funds and choose between short-duration and long-duration funds.