Yield refers to the income generated from an investment over a specific period, typically expressed as an annual percentage. This income may come from interest payments, dividends, or capital gains. In fixed-income Securities like Bonds, the yield helps investors assess return potential and compare investment options. Higher yields may offer better returns but also imply higher risk. Yield is also influenced by market interest rates and inflation expectations. It is a crucial metric for income-focused investors and plays a significant role in portfolio planning, especially in evaluating the trade-off between risk and reward.
Example:
An investor earns 4% annual income from Bond holdings.
