In finance, yield refers to the earnings generated and realized on an investment over a particular period of time. It is expressed as a percentage based on the invested amount, current market value, or face value of the security. Yield includes the interest earned or dividends received from holding a particular security. Depending on the valuation (fixed vs. fluctuating) of the security, yields may be classified as known or anticipated. Yield is a measure of cash flow that an investor gets on the amount invested in a security. It is mostly computed on an annual basis, though other variations like quarterly and monthly yields are also used. Yield should not be confused with total return, which is a more comprehensive measure of return on investment.

There are different types of yields in finance, including:

• Current Yield: This is the bond interest rate as a percentage of the current price of the bond.
• Yield to Maturity: This is an estimate of what an investor will receive if the bond is held to its maturity date.
• Dividend Yield: This compares a company’s annual dividends to its share price. It is a popular method used by dividend investors, who prefer to take advantage of regular dividend payments.
• Stock Yield: This measures the growth of an investment. It is a popular method among value investors, who look for stocks with strong growth potential. There are two ways to measure stock yield – stock return and rate of return.
• Bond Yield: This measures the return an investor realizes on a bond. It can be calculated in different ways depending on the type of bond.

Yield is an important metric in finance because it measures ...