Value Line University

Yield

Whatever price investors pay for a bond—its face value at the time it is issued, a discounted price when interest rates on new bond increase, or a premium price when interest rates drop—the amount that's repaid at maturity is the face value, typically $1,000.

For example, whether you pay $958, $1,000 or $1,150 in the bond market, you will get back $1,000 if you own the bond when it comes due. You have to take that situation into account if you are considering buying bonds after they are issued. Specifically what you want to know is the bond's "Yield to Maturity," which factors in the amount of time left in the bond's term as a way to evaluate what you will earn on your investment.

"Yield to Maturity" measures the annual rate of return an investor will receive from both the interest to be paid and any appreciation or depreciation expected when the bond matures (is paid off).

Those figures are available from your investment advisor and, for certain bonds, in the financial press. --->