Redemption Yield
Redemption yield is the price-implied annualized rate from coupons and principal paid on a specified redemption date.
Bond yield measures for comparing final maturity, issuer calls, principal repayment timing, and the lowest contractual redemption outcome.
Redemption yields connect a bond’s price with coupons and principal paid at a specified endpoint. The endpoint matters: final maturity, an issuer call, and an assumed average-life date can produce materially different annualized yields for the same security.
Yield to Maturity is the baseline for a plain bond expected to remain outstanding. Yield to Call tests one issuer redemption date and price. Yield to Worst prevents a callable bond from being presented only through its most favorable path.
| Analytical question | Starting measure |
|---|---|
| What if all scheduled payments continue through final maturity? | Yield to maturity |
| What if the issuer redeems on one specified call date? | Yield to call |
| Which applicable non-default maturity or call yield is lowest? | Yield to worst |
| When is principal expected to return across multiple paydowns? | Yield to average life |
| What yield applies to another stated redemption event? | Redemption yield |
Use the same settlement date, full price, coupon schedule, day count, and annualization across scenarios. Then verify call prices, call protection, sinking-fund terms, amortization, prepayment, and investor-controlled options in the governing documents.
These measures assume the modeled payments occur. They do not establish default probability, recovery, realized holding-period return, call likelihood, or reinvestment income after redemption. Credit, liquidity, duration, spread, costs, taxes, and inflation remain separate parts of the analysis.
Bond Yield provides the broader framework for comparing redemption yields with coupon, current, effective, and realized-return measures.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
Redemption yield is the price-implied annualized rate from coupons and principal paid on a specified redemption date.
Yield to average life evaluates yield using weighted-average principal repayment timing rather than final legal maturity alone.
Yield to call is the price-implied annualized rate if a callable bond is redeemed on a specified call date at its call price.
Yield to maturity is the price-implied annualized rate for a bond's scheduled coupons and principal through final maturity.
Yield to worst is the lowest applicable non-default yield among a bond's maturity and contractual early-redemption scenarios.