In the context of bonds, what is "yield"?

Yield in the context of bonds refers specifically to the income return on an investment, expressed as a percentage of the investment’s initial cost or current market value. It measures how much income an investor can expect from the bond, typically generated through interest payments, which are usually paid semi-annually.

When discussing yield, it's important to distinguish it from total returns, which includes both interest payments and any capital appreciation or depreciation. Yield focuses solely on the income aspect, thereby providing a clear picture of the bond's ability to generate cash flow.

This concept is particularly relevant for investors who prioritize current income generation, as yield allows them to assess and compare the income-generating capability of different bonds relative to their cost or market price.