Yield
Also called: dividend yield, bond yield
Yield is the income an investment pays each year as a percentage of its price, such as a bond's interest or a stock's dividends.
Because yield divides income by price, it rises when the price falls. A yield that looks unusually high can be a sign that investors expect the payment to be cut.
Formula
Yield = annual income ÷ price
Related terms
- Bond: A bond is a loan to a government or company that pays the lender interest (the coupon) and returns the full amount (the face value) at a set date.
- Dividend: A dividend is a cash payment a company makes to its shareholders out of its profits, usually every quarter.
- Interest rate: An interest rate is the price of borrowing money, stated as a percentage of the loan per year.
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