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What does yield mean in finance?

In finance, yield is the amount of relative profit or loss generated on an investment over a period of time. Yield is typically represented as a percentage because the performance of an investment is compared to the initial amount spent to acquire it. Why is yield important?

What is the difference between yield and interest rate?

Yield is the annual net profit that an investor earns on an investment. The interest rate is the percentage charged by a lender for a loan. The yield on new investments in debt of any kind reflects interest rates at the time they are issued. Yield refers to the return that an investor receives from an investment such as a stock or a bond.

What is a yield based on?

The yield of a stock, bond, or other asset is the amount of money its investors are paid. An investment's yield includes the interest it earns or the dividends paid to investors. Yield is expressed as a percentage based on the invested amount, the current market value, or the face value of the security.

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