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Yield Curve
Yield-to-maturity
Maturity
Coupon

Yield
Term category: Bonds, Economics
In 10 words or less: The rate of return on a capital investment.

Definition: In bonds, this is the rate of return based on a bond's interest rate. It's not a true measure of the value of the bond, though.

More in depth: A bond pays interest at a set rate. This is called the coupon rate or current yield. However, a person can also make money on a bond based on capital gains. For example, if you paid $93.75 for a $100 bond with a 12% interest, you would get more than 12% because you would get the interest AND the $6.25 difference when the bond matures. This actual rate of return is called the "yield to maturity."

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Wall Street Journal Guide to Understanding Money and Investments by Kenneth M. Morris
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Beating the Dow with Bonds By Michael B. O'Higgins

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