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Yield (economics)

Yield (economics) Definition

The yield of a financial instrument, usually a debt or other fixed income instrument, is the amount the holder is paid each year for leaving his or her money invested in that instrument. Unlike a corporate dividend, a yield is fairly certain, unless there is a bankruptcy.


While yields vary with inflation, they tend to fit in a fixed order: the least risky instruments, such as Treasury bonds, yield the least, then safe and "guaranteed" instruments like long-term deposits, then overnight deposits, and so on to the various municipal bond and corporate bonds. Extremely risky instruments with high yield are usually called junk bonds.








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