BROWSE

Yield Basis

What is 'Yield Basis'

A method of quoting the price of a fixed-income security as a yield percentage, rather than in dollars. This allows bonds with varying characteristics to be easily compared.

Explaining 'Yield Basis'

Unlike stocks, which are quoted in dollars, most bond quotes include a yield %. For example, Corp. ZZZ is listed with a 6.75% coupon, a Sept 04/20 maturity, has a dollar value of 94.00 and a yield of 9%.


This bond quote tells a bond trader that the bond is currently trading at a discount because its yield basis (9%) is greater than its coupon rate (6.75%). A bond trader could then compare the bond to others within a certain industry.


Further Reading


Bond ratings, bond yields and financial regulation: some findings
www.journals.uchicago.edu [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …

Impact of copula choice on the modeling of crop yield basis riskImpact of copula choice on the modeling of crop yield basis risk
onlinelibrary.wiley.com [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …

The bond yield'conundrum'from a macro-finance perspectiveThe bond yield'conundrum'from a macro-finance perspective
papers.ssrn.com [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …

What moves sovereign bond markets? The effects of economic news on US and German yieldsWhat moves sovereign bond markets? The effects of economic news on US and German yields
papers.ssrn.com [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …

Sovereign bond yield spillovers in the Euro zone during the financial and debt crisisSovereign bond yield spillovers in the Euro zone during the financial and debt crisis
www.sciencedirect.com [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …

The high-yield spread as a predictor of real economic activity: evidence of a financial accelerator for the United StatesThe high-yield spread as a predictor of real economic activity: evidence of a financial accelerator for the United States
link.springer.com [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …

The US Treasury yield curve: 1961 to the presentThe US Treasury yield curve: 1961 to the present
www.sciencedirect.com [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …

Dividend-yield strategies in the Canadian stock marketDividend-yield strategies in the Canadian stock market
www.tandfonline.com [PDF]
… of real GDP and the lagged spread between the 10-year and three-month Treasury yields … Thus, a spread of 100 basis points (1 percent) implies future growth of 2.8 percent … _____ , and _____ .“The Yield Curve as a Predictor of US Recessions,” Federal Reserve …



Q&A About Yield Basis


What is the definition of yield?

Yield is a measure of the past year's dividends on a stock (a share), expressed as a percentage of the share's market value.

How do you calculate dividend yield?

Dividend yield is calculated by dividing the annual dividends per share by the current price per share.

What is a yield basis?

A yield basis is a method of quoting the price of a fixed-income security as a yield percentage, rather than in dollars.

How can you compare bonds using this information?

You can compare bonds within an industry using this information.

How do you calculate yield to maturity?

Yield to maturity is applied to fixed income securities. It is the holder's total return, calculated assuming it is held until maturity, and assuming there is no default.

What does this quote tell you about the bond's value?

The quote tells you that the bond is currently trading at a discount because its yield basis (9) is greater than its coupon rate (6.75).