Yield

Key Highlights

• Yield measures the amount of income generated relative to its purchase price by expressing it as a percentage.

• Yield Rate= (Income/ Investment Value) * 100

What is Yield?

Yield is a concept associated with investments that refer to the return generated on an asset, such as stocks or bonds. It measures the amount of income generated relative to its purchase price by expressing it as a percentage.

Yield Formula

A general formula that applies to various investments and calculates the yield rate is:

Yield Rate= (Income/ Investment Value) * 100

This formula represents yield as a percentage of the income generated with respect to the value of the investment.

Example of Yield

As an example, A bond that an investor purchases for INR 1,000 and earns INR 50 in interest during the first year would enable them to earn a 5% yield. Yields can also apply to other types of investments and assets such as real estate or cryptocurrency. Measuring yield can help investors understand how much they are receiving back compared to their initial investment and helps inform their decision-making when investing.