Asked by Anonymous

Updated on 18 Apr 2019

Is it possible for a bond to have a negative yield?


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Zann Chua
Zann Chua,
Level 6. Master
Answered on 21 Mar 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!