What is '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 the 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.

Required Yield
Required yield is the return a bond must offer in order for the ... 
Term To Maturity
In bonds, term to maturity is the time between when a bond is ... 
Yield To Maturity (YTM)
Yield to maturity (YTM) is the total return expected on a bond ... 
Current Maturity
The current maturity is the interval between the present date ... 
Coupon Rate
Coupon rate is the yield paid by a fixed income security, which ... 
Straight Bond
A straight bond is a bond that pays interest at regular intervals, ...

Investing
How Do I Calculate Yield To Maturity Of A Zero Coupon Bond?
Yield to maturity is a basic investing concept used by investors to compare bonds of different coupons and times until maturity. 
Investing
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. 
Investing
4 basic things to know about bonds
Learn the basic lingo of bonds to unveil familiar market dynamics and open to the door to becoming a competent bond investor. 
Managing Wealth
How Bond Prices and Yields Work
Understanding bond prices and yields can help any investor in any market. 
Investing
Bond yield curve holds predictive powers
This measure can shed light on future economic activity, inflation levels and interest rates. 
Investing
Understanding Interest Rates, Inflation And Bonds
Get to know the relationships that determine a bond's price and its payout. 
Investing
How Bond Market Pricing Works
Want to know how bond price are determined? Learn the basic rule of the bond market.

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. Read Answer >> 
How do I calculate yield to maturity of a zerocoupon bond?
Find out how to calculate the yield to maturity of a zerocoupon bond, and learn why this calculation is simpler than one ... Read Answer >> 
When is a bond's coupon rate and yield to maturity the same?
Find out when a bond's yield to maturity is equal to its coupon rate, and learn about the components of bonds and how they ... Read Answer >> 
Current yield vs yield to maturity
Learn about the relationship between a bond's current yield and its yield to maturity, including how the market price of ... Read Answer >> 
How do I use the holding period return yield to evaluate my bond portfolio?
Find out how to use the holding period return yield formula to evaluate the performance of bonds in your portfolio, and view ... Read Answer >>