CFA Level I terms: Y

A yield curve plots the YTM of an issuer's bonds against their maturities, using bonds with otherwise similar features.

Current yield, yield to maturity and the yield curve Fixed Income

10-year, 5% coupon bonds: yield 3%, 5%, 7%.

What makes duration higher or lower Fixed Income

The yield spread is what is left: yield to maturity minus the benchmark. It captures the bottom-up forces specific to the issuer and the bond.

G-spread, I-spread, Z-spread and option-adjusted spread Fixed Income

If it is called, the investor receives the call price, not par, and the coupons stop on that date. The yield to call is the yield on that assumption.

Yield to call and yield to worst Fixed Income

Yield to maturity (YTM) is the bond's internal rate of return: the single rate r that makes the present value of all remaining cash flows equal to today's price.

Current yield, yield to maturity and the yield curve Fixed Income

So the cautious quote is the lowest yield the investor could end up with. That is the yield to worst.

Yield to call and yield to worst Fixed Income

Discount each coupon and the par value at the market discount rate: the return the market demands on bonds of the same risk and maturity. It also goes by required yield or required rate of return, and a quoted price implies it as the yield-to-maturity.

Pricing a bond from its yield to maturity Fixed Income