1. Glossary of Financial Terms
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| Y | Z
Yankee bonds
Y Foreign bonds denominated in US$ issued in the
United States by foreign banks and corporations.
These bonds are usually registered with the SEC. For
example, bonds issued by originators with roots in
Japan are called Samurai bonds.
Yankee CD
A CD issued in the domestic market, typically New
York, by a branch of a foreign bank.
Yankee market
The foreign market in the United States.
Yard
Slang for one billion dollars. Used particularly in
currency trading, e.g. for Japanese yen since on billion
yen only equals approximately US$10 million. It is
clearer to say, " I'm a buyer of a yard of yen," than to
say, "I'm a buyer of a billion yen," which could be
misheard as, "I'm a buyer of a million yen."
Yield
The percentage rate of return paid on a stock in the
form of dividends, or the effective rate of interest paid
on a bond or note.
Yield curve
The graphical depiction of the relationship between
the yield on bonds of the same credit quality but
different maturities. Related: Term structure of
interest rates. Harvey (1991) finds that the inversions
of the yield curve (short-term rates greater than long
term rates) have preceded the last five U.S. recessions.
The yield curve can accurately forecast the turning
points of the business cycle.
Yield curve option-pricing models
Models that can incorporate different volatility
assumptions along the yield curve, such as the Black-
Derman-Toy model. Also called arbitrage-free option-
pricing models.
Yield curve strategies
Positioning a portfolio to capitalize on expected
changes in the shape of the Treasury yield curve.
Yield ratio
The quotient of two bond yields.
Yield spread strategies
Strategies that involve positioning a portfolio to

2. capitalize on expected changes in yield spreads
between sectors of the bond market.
Yield to call
The percentage rate of a bond or note, if you were to
buy and hold the security until the call date. This yield
is valid only if the security is called prior to maturity.
Generally bonds are callable over several years and
normally are called at a slight premium. The
calculation of yield to call is based on the coupon rate,
length of time to the call and the market price.
Yield to maturity
The percentage rate of return paid on a bond, note or
other fixed income security if you buy and hold it to
its maturity date. The calculation for YTM is based on
the coupon rate, length of time to maturity and market
price. It assumes that coupon interest paid over the life
of the bond will be reinvested at the same rate.
Yield to worst
The bond yield computed by using the lower of either
the yield to maturity or the yield to call on every
possible call date.