Yield

Definition

Yield is a component of the return on an investment. In the equity market, a share’s dividend yield is its annual dividend payment as a percentage of the share’s market price. In the fixed-income market, a bond’s yield is its annual interest payment as a percentage of the bond’s market price. Various measures of yield exist: most notably, current yield, which considers only coupon interest; and yield to maturity, which is the rate that will make the present value of the bond’s expected cash flows equal to the bond’s market price.