What is simple yield?

CFA Level I Fixed Income
#1

What is simple yield? my notes says it is ( annual coupon payment +/- amortization ) / bond price.

What is that amortization doing there? When do we use simple yield?

Thanks!

#2

The amortization is there to incorporate the gain or loss that will occur because the bond is selling at a discount or premium, respectively. It’s a poor man’s approximation to YTM.

It’s usually used to quote JGBs (Japanese government bonds).

#3

Thank you S2000magician, your answers are always succinct and to the point.

#4

My pleasure.