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Yield
Yield expresses income relative to an investment's price or another stated base. The calculation depends on the security and the named yield convention.
Plain-English definition: Yield expresses income relative to an investment's price or another stated base. The calculation depends on the security and the named yield convention.[1]
How the term is used
For bonds, coupon yield, current yield, yield to maturity, yield to call, and yield to worst answer different questions. Stocks and funds may also quote yield based on annual distributions and current price.[2][1]
What to check before relying on it
Name the yield type and calculation date. A higher yield can reflect lower price, greater credit risk, leverage, return of capital, or a temporary payment rather than superior expected return.
Example
A bond's current yield divides annual coupon cash by market price, while yield to maturity also incorporates the purchase price, redemption value, timing, and reinvestment assumptions.
Sources
- FINRA: Defining the Value of an Investment — yield measures for bonds, stocks, and funds. Accessed October 24, 2026.
- FINRA: Understanding Bond Yield and Return — coupon yield, current yield, yield to maturity, yield to call, and yield to worst. Accessed October 24, 2026.