1. What is Bond Capital Gains Yield?

Bond Capital Gains Yield (CGY) measures the price appreciation component of a bond's total return, separate from its coupon payments. It shows how much the bond's price has changed relative to its purchase price.

2. How Does the Calculator Work?

The calculator uses the Bond CGY formula:

Where:

• \( Price\ Change \) — Difference between current and purchase price (USD)
• \( Coupon \) — Periodic coupon payment (USD)
• \( Purchase\ Price \) — Original purchase price of the bond (USD)
• \( Coupon\ Yield \) — Bond's coupon yield expressed as decimal

Explanation: The formula calculates the capital gains portion of total return by accounting for both price changes and coupon payments relative to the original investment.

3. Importance of Bond CGY Calculation

Details: Bond CGY helps investors separate price appreciation from coupon income, which is crucial for understanding the sources of bond returns and making investment decisions.

4. Using the Calculator

Tips: Enter all values in USD except coupon yield which should be in decimal form (e.g., 0.05 for 5%). Purchase price must be greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: How is Bond CGY different from total return?
A: Total return includes both capital gains and coupon income, while CGY focuses specifically on the price appreciation component.

Q2: Can Bond CGY be negative?
A: Yes, if the bond's price has decreased more than the coupon payments can offset.

Q3: How does maturity affect Bond CGY?
A: As bonds approach maturity, their prices typically converge to par value, affecting CGY.

Q4: Why subtract coupon yield in the formula?
A: This isolates the capital gains component by removing the expected coupon return.

Q5: How often should I calculate Bond CGY?
A: Regular calculation helps track performance, especially when interest rates are volatile.