A bond yield is the annual return an investor receives from a fixed interest security. There are different ways of calculating a bond’s yield but typically, it is arrived at by dividing the bond’s coupon (the regular payments made by the issuer of the bond) by its price. So for example, if a bond trades at £100 and pays £4 each year, then its yield will be 4%.
As the price of a bond rises in value, its yield will fall and vice versa. Yields from the same issuer tend to differ depending on how long that bond has until it matures. A yield curve is formed by plotting how yield’s from the same issuer change over time to maturity.