Home > West's Encyclopedia of American Law > Yield

Current return from an investment or expenditure as a percentage of the price of investment or expenditure.

The term yield is the proportionate rate that income from an investment bears to the total cost of the investment. For example, a ten dollar profit on a one hundred dollar investment represents a 10 percent yield. Thus, a yield for stock dividends or bond interest paid will be expressed as a percentage of the current price. A yield can also refer to the bond coupon or stock dividend rate divided by the purchase price.

There are several specific types of yields. On bonds, a current yield is the annual interest paid divided by the current market price of the bond. As interest rates fall, the market price of the bond rises; as they rise, bond prices fall. The current yield reflects the actual rate of return on a bond. For example, a 9.5 percent bond with a face value of $1,000 yields $95 per year. If this bond is...