Since fixed income markets are concerned with interest rates, the varying price changes for equivalent interest rate changes make it difficult to compare a 2-year bond to a 10-year bond. The yield, or the internal rate of return of a bond, transforms the price into a measure that places bonds of different maturities on a level playing field.
- Chapter 2: Bonds
- from Interest Rate Markets: A Practical Approach to Fixed Income
- Publisher: John Wiley & Sons
- Released: April 2011
yield - an important parameter to equate varying bonds.
Share this highlighthttp://www.safaribooksonline.com/a/interest-rate-markets/20554690/