# What does Bond Interest Yield mean?

#### Bond Interest Yield meaning in Finance Dictionary

Yield computations on bonds seek to show the return on a gilt or relationship as a percentage of either its nominal price or its existing price. You can find three kinds of yield calculation that are popular: moderate, running/current and redemption yield. Moderate yield is calculated by dividing the yearly income on the bond by its moderate or 'par' worth. So that the nominal yield on a £100 relationship paying 5percent interest annually is 5/100 x 100 = 5percent. Present or 'running yield' is computed by dividing the annual earnings in the bond by its current market cost. So if the marketplace cost of the £100 bond dropped to £95, the present yield on the bond at that moment could be 5/95 x 100 = 5.36%. The redemption yield shows what the full total return on a bond will be if held to its readiness date. It reflects not only the interest repayments a bondholder will receive, and the gain/loss he can make with regards to matures.