What does 'yield' refer to in the context of fixed-income securities?

Yield in the context of fixed-income securities refers to the income return on an investment, which is typically expressed as a percentage. This income can come from various sources, primarily interest payments made by the bond issuer to the bondholder. Yield essentially measures how much income an investor will earn relative to the amount invested, helping investors assess the performance of their bond investments over a specified period.

For fixed-income securities, yield can also vary based on the type of bond, current market conditions, and how long until the bond matures. Understanding yield is crucial because it allows investors to compare the potential income from different fixed-income securities, making it a fundamental concept in evaluating investment opportunities in bonds.