Yield Basis

Yield basis is the difference between the stated yield of a security and the yield of another security with a similar risk and maturity. It is used to compare the yield of one security to another.

For example, if one security has a stated yield of 5% and another security has a stated yield of 7%, the yield basis is 2%. This means that the second security has a higher yield than the first one.

The formula for yield basis is: Yield Basis = (Yield of Security A - Yield of Security B) / Yield of Security B.