Realized yield is the actual return earned during the holding period for an investment. It may include interest payments, dividends, and other cash distributions. The realized yield on investments with maturity dates is likely to differ from the stated yield to maturity under most circumstances. Realized Yield may be applied to a bond sold prior to its maturity date or a dividend-paying security.
Generally speaking, the realized yield on Bonds includes the coupon payments received during the holding period, plus or minus the change in the value of the original investment, calculated on an annual basis. The full amount of profit earned on an investment over a period of time, which may or may not be the same as the maturation period. The realized yield includes the final yield, any coupon payments, gains from reinvested interest, and other income sources related to the investment.
In general, the realized yield is a generic measure of a bond yield as the length of time for which it will be held could be any period during its life. If the bond is held to maturity, the realized yield will equal the yield-to-maturity, and if it is held until the first call date, this yield will be identical to the yield-to-call.
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An investor who contemplates selling a bond before redemption date can calculate the realized yield by estimating the price at which the bond will be sold and the length of time it will be held.