Glossary

Yield

This is the measure of the return on an investment and is shown as a percentage. A stock yield is calculated by dividing the annual dividend by the current market price of the stock. For example, a stock selling at $50 and with an annual dividend of $5.00 per share yields 10%. A bond yield is a more complicated calculation, involving annual interest payments plus amortizing the difference between its current market price and par value over the life of the bond.

Yield Curve

A graphic representation of the relationship among yields of bonds of the same quality, but with different maturities.

Yield to Maturity

The rate of return an investor receives if a fixed-income security is held to maturity.