What is the difference between yield, coupon, and interest when dealing with Bonds?

yield and interest are probably interchangeable. Using yield is almost always better because interest rates are things that affect bonds but yield is a characteristic of the bond. The coupon is the amount of interest paid on the bond so if a $1000 par 5-yr bond has a 6% coupon paid semiannually, you will get a deposit in your brokerage account of $30 every 6 months. The yield of the bond (also called the yield to maturity - YTM) takes into account the sale price of the bond if it is different than par. Thus, if you bought the above bond for 1050 dollars, the actual return on the bond needs to include that you paid 1050 for something but are only getting 1000 back at maturity. The formula is a little complicated but the YTM is the discount rate that equates all the cash flows with the current market price of the bond. In this case the YTM is about 6% - 1%/year = 5% but not quite. For a bond selling at par the YTM = coupon rate. For a premium bond YTM < coupon rate. For discount YTM > coupon rate.