Investment yield is used to describe the amount earned on a security, over a period of time. It includes the interest on debt securities, dividend on equities or both. It is an annual value which is based on the current market value or Face Value of the security and is represented as a percentage. The bond’s coupon is the interest rate which is fixed at the time of its issuance, and the coupon rate is the investment yield to be paid at maturity.
What are the features of Investment Yield?
Features of Investment Yield are:
1. Investment Yield of a security is a tool used by investors for calculating the earnings on financial securities.
2. It is a ratio which represents the amount of interest and/or dividend a company pays to investors every year, in comparison to its price.
3. Investment Yield is a measure of cash flow that an investor receives on the amount invested in a security.
