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Definition: In bonds, this is the rate of return based on a bond's interest rate. It's not a true measure of the value of the bond, though.
TeenAnalyst Advice: A bond pays interest at a set rate. This is called the yield. However, a person can also make money on a bond based on capital gains. For example, if you paid $93.75 for a $100 bond with a 12% interest, you would get more than 12% because you would get the interest AND the $6.25 difference when the bond matures. This actual rate of return is called the "yield to maturity."
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