Yield

A yield is the annual return on a bond, stated in percent of what you pay for it. When a bond pays a fixed amount of interest, the yield depends on the price: a bond with a $1,000 face value paying $50 a year has a current yield of 5 percent at a price of $1,000, and about 5.6 percent if its price falls to $900. Prices and yields move in opposite directions.

Yield to maturity also counts the gap between the price you pay and the amount repaid when the bond matures, spread over the years you hold it. A yield is not a promise: you earn it only if the issuer keeps paying and you hold to maturity, and even then your return can differ. Selling earlier can give you more or less than you paid.