Asked by Anonymous
Updated on 18 Apr 2019
Yes it is possible for a bond to have a negative yield.
When a bond has a negative bond yield, it likely means that the bondholder is losing money on investment. Whether the bond has a negative year is usually dependent on the type of yield that is being calculated. A bond's yield can be determined by either using the yield-to-maturity formulas or by using the current yield.
Current yield - it is used to detemine the amount of interest paid relative to the current selling price.
Yield to maturity - It is more comprehensive than the current yield since it incorporates the financial impact of the bond's selling price and its par value.
Hope this helps!