How Bond Yields Work and Why They Matter

By Allen Krewzz

Published July 4, 2026Updated July 4, 2026

How Bond Yields Work and Why They Matter

Coupon Rate vs Yield

Current Yield

Yield to Maturity (YTM)

Why Prices and Yields Move Inversely

If interest rates rise after you buy a bond, newly issued bonds will offer higher coupons. Your existing bond becomes less attractive at its original price, so its market price falls until its yield is competitive with new issues.

The Yield Curve

Credit Risk and Yield

Common Mistakes

Conclusion

Bonds

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