Yield is the return earned on an investment, usually expressed as a percentage of its cost or current market value over a specific period.
Yield is a key financial metric used to measure income generated from investments such as bonds, fixed deposits, stocks, and mutual funds. It helps investors compare returns across different investment options. Yield generally focuses on regular income (like interest or dividends), not price appreciation.
There are different types of yield depending on the investment:
Bond Yield: Interest received from a bond relative to its price
Dividend Yield: Annual dividend divided by the stock’s current price
Yield to Maturity (YTM): Total expected return on a bond if held until maturity
A higher yield can mean better income, but it may also indicate higher risk, especially if the yield rises due to falling prices. Investors should always evaluate yield along with risk, tenure, and overall return.
"If a bond priced at ₹1,000 pays ₹80 annually as interest, its yield is 8%. (80 ÷ 1,000 × 100 = 8%)"