What is a 'Realized Yield'
Realized yield is the actual return earned during the holding period for an investment, and may include dividends, interest payments and other cash distributions. The term may be applied to a bond sold prior to its maturity date or a dividendpaying security. Generally speaking, the realized yield on bonds includes the coupon payments received during the holding period, plus or minus the change in the value of the original investment, calculated on an annual basis.
BREAKING DOWN 'Realized Yield'
The realized yield on investments with maturity dates is likely to differ from the stated yield to maturity under most circumstances. One exception occurs when a bond is purchased and sold at face value, which is also the redemption price of the bond at maturity. For example, a bond with a coupon of 5% that is purchased and sold at face value delivers a realized yield of 5% for the holding period. The same bond redeemed at face value when it matures delivers a yield to maturity of 5%. In all other circumstances, realized yields are calculated based on payments received and the change in value of principal relative to the amount invested.Realized Yields With Bonds
Realized yield is the total return when a bond is sold prior to maturity. For example, a bond maturing in three years with a 3% coupon purchased at face value of $1,000 has a yield to maturity of 3%. If the bond is sold exactly one year after purchase at $960, the loss of principal is 4%. The coupon payment of 3% brings the realized yield to negative 1%. If the same bond is sold one year later at $1,020 for a 2% gain in principal, the realized yield is increased to 5% due to the 3% coupon payment.
Early CD Withdrawal
Certificate of deposit investors who cash out prior to the maturity date are often charged a penalty. On a twoyear CD, the typical penalty for early withdrawal is six months of interest. For example, say an investor who cashes out a twoyear CD paying 1% after one year accrues $1,000 of interest. The penalty of six months equates to $500. After paying the penalty, the investor nets $500 over one year for a realized yield of 0.5%.
FixedIncome Funds
The calculation for realized yield also applies to exchangetraded funds (ETF) and other investment vehicles without maturity dates. For example, an investor who holds an ETF paying 4% interest for exactly two years and sells for a 2% gain has earned 4% per year. The gain in principal is amortized over the twoyear holding period for a 1% gain per year, bringing the realized yield to 5% per year.

Bond Yield
The amount of return an investor will realize on a bond. Several ... 
Yield
The income return on an investment. This refers to the interest ... 
Term To Maturity
The remaining life of a financial instrument. In bonds, it is ... 
Effective Yield
The yield of a bond, assuming that you reinvest the coupon (interest ... 
Yield To Maturity (YTM)
The total return anticipated on a bond if the bond is held until ... 
Current Yield
Annual income (interest or dividends) divided by the current ...

Financial Advisor
Simple Math for FixedCoupon Corporate Bonds
A guide to help to understand the simple math behind fixedcoupon corporate bonds. 
Investing
Understanding Bond Prices and Yields
Understanding this relationship can help an investor in any market. 
Investing
Calculating Bond Equivalent Yield
The bond equivalent yield calculates the semiannual, quarterly or monthly yield on a discount bond or note. 
Investing
Explaining the Coupon Rate
Coupon rate is the stated interest rate on a fixed income security. 
Investing
Corporate Bonds: Advantages and Disadvantages
Corporate bonds can provide compelling returns, even in lowyield environments. But they are not without risk. 
Investing
4 Types Of Money Market Yields
We give you four equations to help figure out the yields on your investments. 
Investing
How Does A Bondâ€™s Coupon Interest Rate Affect Its Price?
All bonds come with a coupon interest rate, which is the fixed annual interest a bond pays. 
Managing Wealth
How Bond Prices and Yields Work
Understanding bond prices and yields can help any investor in any market. 
Investing
Find The Right Bond At The Right Time
Find out which bonds you should be investing in and when you should be buying them.

What is the difference between yield to maturity and the yield to call?
Determining various the various yields that callable bonds can provide investors is an important factor in the bond purchasing ... Read Answer >> 
What is the difference between yield to maturity and the coupon rate?
A bond's coupon rate is the actual amount of interest income earned on the bond each year based on its face value. The yield ... Read Answer >> 
How do I calculate yield to maturity of a zero coupon bond?
Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than ... Read Answer >> 
How can I use the holding period return yield to determine whether or not I should ...
Find out how to use the holding period return yield formula to determine whether it is a good time to sell your bond based ... Read Answer >> 
Can I use the current yield to compare a bond to an equity investment?
Learn about the different types of yield measurements for stocks and bonds, and find out how to make careful comparisons ... Read Answer >>