The yield on a bond is the annual coupon payment expressed as a percentage of the market price of the bond.
It illustrates the percentage of the coupon payment the investor is being rewarded with relative to the value of the bond. Higher bond yields illustrate that the investor will receive a large fraction of the value of their bond realtively early on. Bond yields have an inverse relationship with the market price of the bond as well as interest rates and can be calculated using the formula below:
