facebookIs it possible for a bond to have a negative yield? - Seedly

Anonymous

18 Apr 2019

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General Investing

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

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Hello!

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.

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