Summary
Bond Metrics help investors evaluate the income potential, risk, price sensitivity, and credit characteristics of a bond. These measures are used to compare bonds and assess whether they match an investor’s objectives.
Bonds differ from shares because they usually provide contractual interest payments and have a maturity date.
Why it matters
Bond investors need to understand both return and risk. A bond may offer an attractive yield, but that yield should be considered alongside credit quality, maturity, liquidity, and interest rate sensitivity.
Bond metrics help investors assess whether the potential return is appropriate for the risk involved.
How to read it
Key bond metrics include price, yield to maturity, current yield, coupon, duration, convexity, liquidity, and credit measures.
Investors should review these metrics together rather than focusing on yield alone.