Minimum Yield

DEFINITION of 'Minimum Yield'

The lesser of a bond's yield-to-call and yield-to-maturity. The minimum yield is used by investors who want to determine a conservative estimate for the value of a particular bond. A bond's yield-to-call and yield-to-maturity will change according to market conditions, though its yield-to-call will always adjust faster. If the current price of a bond is below the call price, the bond's yield-to-maturity will be its minimum yield.

BREAKING DOWN 'Minimum Yield'

Because a bond's yield-to-maturity will move up and down faster than its yield-to-call, investors will see a crossover point. The point at which the two yields are equal is called the crossover price. For example, a bond that has been falling in price but sees the price start to increase will have a yield-to-maturity (it's minimum yield in this case) that shifts directions, making the yield-to-call the minimum yield.

RELATED TERMS
  1. Cushion Bond

    A type of callable bond that sells at a premium because it carries ...
  2. Bond Yield

    The amount of return an investor will realize on a bond. Several ...
  3. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
  4. Ba3/BB-

    Bonds rated Ba3/BB- are generally considered speculative in nature ...
  5. Bond Quote

    The price at which a bond is trading. A bond quote is typically ...
  6. Required Yield

    The return a bond must offer in order to be a worthwhile investment. ...
Related Articles
  1. Markets

    How Bond Market Pricing Works

    Yield is the commonest measure used to determine a bond’s expected return. Yield-to-maturity and spot rates are the two primary yield measures.
  2. Investing

    Explaining the Coupon Rate

    Coupon rate is the stated interest rate on a fixed income security.
  3. Markets

    Understanding the Different Types of Bond Yields

    Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment.
  4. Markets

    Understanding Interest Rates, Inflation And Bonds

    Get to know the relationships that determine a bond's price and its payout.
  5. Markets

    Understanding Bond Quotes

    A bond quote is a bond’s trading price.
  6. Managing Wealth

    Find The Right Bond At The Right Time

    Find out which bonds you should be investing in and when you should be buying them.
  7. Managing Wealth

    How Bond Prices and Yields Work

    Understanding bond prices and yields can help any investor in any market.
  8. Markets

    5 Fixed Income Plays After the Fed Rate Increase

    Learn about various ways that you can adjust a fixed income investment portfolio to mitigate the potential negative effect of rising interest rates.
  9. ETFs & Mutual Funds

    3 Best High-Yielding Long Term Corporate Bond ETFs (LWC, VCLT)

    Learn about the best high-yielding exchange-traded funds that specialize in investing in corporate bonds with a focus on long-maturity fixed-income securities.
  10. Trading

    Finding The Best Yields

    Using yields to supplement earnings can mean big bucks, with the right strategy.
RELATED FAQS
  1. Under MSRB rules, which of the following municipal bonds would be quoted on a yield-to-call ...

    The correct answer is b. MSRB rules require that the customer confirmation show the lowest potential yield. In a bond trading ... Read Answer >>
  2. What is the difference between the yield of stock and the yield of a bond?

    Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ... Read Answer >>
  3. What causes a bond's price to rise?

    Learn about factors that influence the price of a bond, such as interest rate changes, credit rating, yield and overall market ... Read Answer >>
  4. Why do companies issue callable bonds?

    Learn how callable bonds work, how they include an embedded call option, and understand the additional risks that callable ... Read Answer >>
  5. Should investors focus more on the current yield or face value of a bond?

    Find out when investors should focus on a bond's current yield versus its face value, including an example of how current ... Read Answer >>
  6. What does a negative bond yield mean?

    Find out what it means when a bond has a negative yield and what circumstances must arise for the yield to be negative when ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center