Bond terms explained: Price and Yield

Two other key terms you will encounter with regard to bonds are 'price' and 'yield'.

So just what are these two figures then given we have already come across the coupon?

Well, the price is simply the amount you have to pay as the investor in order to obtain £100 nominal of the particular stock.

Often you can buy as much as you want of a gilt, but this is the convention used by the market when it comes to the quote with regard to buying the gilt.

As for the yield, this refers to one of two figures, which are known as the flat and the gross redemption yield.

And equipped with the knowledge of these four terms in this and the previous two bond terminology articles, that's all you need to know about the key figures to gain familiarity of when it comes to bonds and the bond market.

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