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Yield

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In general, yield is a term that defines a return on a capital investment of various forms. Typically, yield is expressed as a percentage and is used as an annual figure. An example of yield would be an investment in real estate or a business deal that generates a ten percent return. It is then said that that investment yielded a ten percent return. In the stock market yield essentially communicates a rate of return made form an investment in common and preferred stocks. This particular yield comes in form of a dividend and is also called a dividend yield. Yield is also a function of the bond market. One of its applications is current yield, which is a coupon rate of interest divided by the bond's purchase price. Additionally, yield is a rate of return on a bond that takes into account the sum annual interest payment, the purchase price, the redemption value, as well as the time period remaining until maturity. This is also referred to as maturity yield or yield to maturity.



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