What is the difference between yield and return?

What is the difference between yield and return?

Yield refers to the income generated from an investment, typically expressed as a percentage of the investment's cost. Return, on the other hand, encompasses the total gain or loss made on an investment, including both income and capital appreciation.

Can you give me an example of each?

Sure! For yield, if you invest $1,000 in a bond that pays $50 annually, the yield is 5%. For return, if you sell that bond for $1,100 after a year, your total return would be $150, which includes the $50 yield plus a $100 capital gain.

Are there different types of yield?

Yes, there are several types of yield, including current yield, yield to maturity, and yield on cost, each measuring different aspects of investment income.

How do I calculate yield?

To calculate yield, divide the annual income generated by the investment by its current market value or purchase price, then multiply by 100 to get a percentage.