Definition of yield

1. real rate of return to the investor or effective cost to the issuer of a security for a specified time period. It differs from the nominal interest rateSee also simple yield; yield to maturity.
2. return from an asset or service provided.
3. conceding a point to another party.

return on a loan or investment, stated as a percentage of price. Yield can be computed by dividing return by purchase price, by current market value, or by any other measure of value. In interest-earning investments, such as bank loans or deposits, yield is interest revenue earned divided by the average balance. In fixed income securities, such as bonds, yields fluctuate as bond prices rise or fall, which means that current yields will differ from redemption yields on the same investments.

1. Banking. The return earned by a loan portfolio expressed as a percentage. Yield is computed by multiplying the outstanding balance by the Annual Percentage Rate paid by the borrowers. prepayment and charge-off of bad loans will, however, reduce the portfolio return.
2. Investments. The income from a bond, interest-bearing note, or time deposit, expressed as an annualized percentage rate. The nominal yield is calculated from the amount invested multiplied by the interest rate paid and the maturity (interest = principal × rate × time). The effective annual yield on a time deposit takes into consideration the effect of interest rate COMPOUNDING on the invested principal balance. current yield on a bond is the current coupon rate of interest in semiannual interest payments, without taking into account whether the bond price is at a premium or a discount in relation to par value. Net yield to maturity is based on the amount payable at maturity, taking into consideration accretion of purchase price dicount (or amortization of premium), plus coupon interest payments. See also average life; bond equivalent yield; discount; total return; yield curve.
3. Securities. The dividends paid to holders of common or preferred stock as of the dividend paying date, measured as a percentage of current market value. The dividend yield, a ratio comparing the dividend rate to the market price per share of common stock, is computed by the following formula:
   dividend yield = annual dividend per share / market price
   Thus, a stock selling at $30, paying a $2 annual dividend, has a dividend yield of 6.6%.

In general: return on an investor's capital investment. A piece of real estate may yield a certain return or a business deal may offer a particular yield.
Agriculture: agricultural output in terms of quantity of a crop per acre.
Bonds: (1) coupon rate of interest divided by the purchase price, called maturity yield or yield to maturity. See also yield to average life.
Lending: total money earned on a loan, that is, the annual percentage rate of interest multiplied by the term of the loan.
Stocks: percentage rate of return paid on a common or preferred stock in dividends. For example, a stock that sells for $20 and pays an annual dividend of $2 per share has a yield, also called a dividend yield, of 10%.
Taxes: amount of revenue received by a governmental entity as a result of a tax.

In general: return on an investor's capital investment. A piece of real estate may yield a certain return, or a business deal may offer a particular yield.
Agriculture: agricultural output in terms of quantity of a crop.
Bonds:

1. coupon rate of interest divided by the purchase price, called current yield. For example, a bond selling for $1,000 with a 10% coupon offers a 10% current yield. If that same bond were selling for $500, however, it would offer a 20% yield to an investor who bought it for $500. (As a bond's price falls, its yield rises and vice versa.)
2. rate of return on a bond, taking into account the total of annual interest payments, the purchase price, the redemption value, and the amount of time remaining until maturity; called maturity yield or Yield To Maturity. See also duration; yield to average life; yield to call.

1. a measurement of the rate of earnings from an investment. See current yield, Yield To Maturity.
   Example: A loan is arranged to yield 8% a year to the lender.

2. the productivity of agricultural land.
   Example: Afarm produces a yield of 5,000 bushels of corn per acre.