1. What is Bond Yield?

Bond yield is the return an investor realizes on a bond investment. In India, bond yield calculation helps investors assess the profitability of fixed-income securities and compare different bond investments.

2. How Does the Calculator Work?

The calculator uses the current yield formula:

Where:

• \( C \) — Annual coupon payment (INR)
• \( P \) — Bond price (INR)

Explanation: Current yield measures the annual income return relative to the bond's current market price, providing a simple way to compare bond investments.

3. Importance of Bond Yield Calculation

Details: Bond yield calculation is essential for Indian investors to evaluate investment returns, assess risk, make informed investment decisions, and compare different bond offerings in the market.

4. Using the Calculator

Tips: Enter annual coupon payment and bond price in Indian Rupees (INR). Both values must be positive numbers, with bond price greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between current yield and yield to maturity?
A: Current yield considers only annual coupon payments relative to price, while yield to maturity accounts for total returns including capital gains/losses if held to maturity.

Q2: What are typical bond yields in India?
A: Bond yields in India vary by type (government, corporate) and tenure, typically ranging from 6% to 12% depending on credit risk and market conditions.

Q3: How does bond price affect yield?
A: When bond prices rise, yields fall, and vice versa. This inverse relationship is fundamental to bond market dynamics.

Q4: Are there tax implications for bond yields in India?
A: Yes, bond interest is taxable as income under Indian tax laws, though some government bonds may have tax benefits.

Q5: Should I consider inflation when calculating bond yield?
A: Yes, real yield (nominal yield minus inflation) provides a better measure of actual purchasing power, especially important in the Indian context.