Yield Basis

DEFINITION of '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.

BREAKING DOWN '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.

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  2. What is the relationship between current yield and yield to maturity (YTM)?

    Learn about the relationship between a bond's current yield and its yield to maturity, including how the market price of ... Read Answer >>
  3. Can the marginal propensity to consume ever be negative?

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  4. How do I calculate yield to maturity of a zero coupon bond?

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  5. What determines the price of a bond in the open market?

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