• The yield-based method specifies the price of a fixed income security (such as a bond) as a percentage of yield rather than in dollars.

  • The yield-based method helps bond buyers to easily compare the characteristics of different bonds before making a purchase.
  • A yield quote tells a bond trader whether a bond is currently trading at a discount or premium compared to other bonds.
  • Buying a bond on a net yield basis means that the income also includes the broker’s profit or trade execution premium.