when a company s stock price increases the current yield goes down because of the inverse relationship between yield and stock price 
the yield on bonds that pay annual interest can be calculated in a straightforward manner called the nominal yield which is calculated as for example if there is a treasury bond with a face value of 1 000 that matures in one year and pays 5 annual interest its yield is calculated as 50 1 000 0 05 or 5 however the yield of a floating interest rate bond which pays a variable interest over its tenure will change over the life of the bond depending upon the applicable interest rate at different terms if there is a bond that pays interest based on the 10 year treasury yield 2 its applicable interest will be 3 when the 10 year treasury yield is 1 and will change to 4 if the 10 year treasury yield increases to 2 after a few months the interest earned on an index linked bond which has its interest payments adjusted for an index such as the consumer price index cpi inflation index will change as the fluctuations in the value of the index yield to maturity ytm is a measure of the total return expected on a bond each year if the bond is held until maturity it differs from nominal yield which is usually calculated on a per year basis and is subject to change with each passing year ytm is the average yield expected per year and the value is expected to remain constant throughout the holding period until the maturity of the bond the yield to worst ytw is a measure of the lowest potential yield that can be received on a bond without the possibility of the issuer defaulting ytw indicates the worst case scenario on the bond by calculating the return that would be received if the issuer uses provisions including prepayments call back or sinking funds this yield forms an important risk measure and ensures that certain income requirements will still be met even in the worst scenarios the yield to call ytc is a measure linked to a callable bond a type of bond that can be redeemed by the issuer prior to its maturity ytc refers to the bond s yield at the time of its call date this value is determined by the bond s interest payments its market price and the duration until the call date as that period defines the interest amount municipal bonds which are bonds issued by a state municipality or county to finance its capital expenditures and are mostly non taxable also have a tax equivalent yield tey 2tey is the pretax yield that a taxable bond needs to have for its yield to be the same as that of a tax free municipal bond and it is determined by the investor s tax bracket 3there are many variations for calculating the different kinds of yields and some liberty is enjoyed by the companies issuers and fund managers to calculate report and advertise the yield value according to their own conventions regulators like the securities and exchange commission sec have introduced a standard measure for yield calculation called the sec yield the sec yield is calculated after taking into consideration the fees associated with the fund 4mutual fund yield is used to represent the net income return of a fund and is calculated by dividing the annual income distribution payment by the value of a mutual fund s shares it includes the income received through dividends and interest that was earned by the fund s portfolio during the given year since mutual fund valuations change every day based on their calculated net asset value the yields are also calculated and vary with the fund s market value each day along with investments yield can also be calculated on any business venture the calculation retains the form of how much return is generated on the invested capital 