Forward Rate
The implied future interest rate derived from today's zero curve — what the market 'expects' rates to be.
Forward rates are implied by the relationship between zero rates at different maturities. The 1Y rate, 2 years from now (the '2y1y forward') is derived from today's 2Y and 3Y zero rates. Formula (continuous): f(t1,t2) = (z₂×t₂ − z₁×t₁) / (t₂ − t₁). Interpretation: If you can lock in 4% for 2 years or 4.5% for 3 years, the implied 1-year rate starting in year 2 must be 5.5% (to make both strategies equivalent). Forward rates aren't forecasts — they're arbitrage-implied rates. But they're critical for: pricing FRAs and swaps, building term structure models, and the CFA L2 'three curves' framework (zero, forward, par).
Current Yield
Annual coupon income divided by the bond's clean price.
Running Yield
Annual coupon income divided by the bond's dirty price (clean price plus accrued interest).
Yield to Maturity (YTM)
The annualized return if you hold the bond to maturity, assuming all coupons are reinvested at the same rate.
Dirty Price
The total settlement price paid for a bond, including accrued interest.
Clean Price
The quoted bond price excluding accrued interest.
Accrued Interest
Interest that has accumulated since the last coupon payment, paid by the buyer to the seller.