Series 51: Understanding Yield

Understanding Yield

The yield listed on the trade confirmation will typically be the same yield that was quoted to the customer. The yield must be included on a customer confirmation for a Build America Bond (BAB), as well as other standard tax-exempt municipal bonds.

Yield disclosure is not required for bonds sold at par, since the yield to maturity is simply the same as the coupon rate. In addition, no yield calculation is required for the following:

• • Municipal fund securities
• • Variable rate bonds, because the coupon rate is periodically reset, so calculation is not possible
• • Bonds in default, because they are no longer paying interest
• • Securities traded on a discounted basis
• • Municipal CMOs

The yield on the confirmation will be