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Yield

YEELD /jiːld/

nounverbB2TOEFLIELTS

FormalBusiness

(n) The income return on an investment, typically expressed as an annual percentage; (v) To produce or provide (a natural, agricultural, or industrial product).

In finance, 'yield' specifically refers to the return generated by an investment relative to its cost or market price, distinct from the absolute amount of profit.

The story behind the word. The word 'yield' comes from the Old English 'gieldan', meaning 'to pay, to render, to restore'. It's related to the Old High German 'gelt' (payment, money), which is also the root of 'guild'. The sense of 'producing' or 'bringing forth' (as in crops) developed later. In finance, 'yield' directly reflects this original meaning of 'paying' or 'rendering' a return on an investment.

Word relationships

Return: Broader term for profit; 'yield' is specifically the income return as a percentage.
Income: The actual money received; 'yield' is the rate of that income relative to the investment.

Loss: The opposite of a positive return or yield.

Commonly confused with

Dividend: A 'dividend' is the actual cash payment; 'yield' is that payment expressed as a percentage of the investment's price.

Word family

Yielding (adjective): Producing or providing a return.

Collocations

dividend yield
bond yield
high yield
yield curve
yield to maturity

Example sentences

"The bond's yield rose as its price fell, making it more attractive to new investors." Bond market
"Despite its high dividend, the stock's overall yield was modest due to minimal capital appreciation." Stock market
"The new farming techniques are expected to yield a much larger harvest this season." Agricultural output

Memory hook

Think of 'yield' as what your investment 'yields' or 'gives' you back in income. Gives back

When not to use

Do not confuse financial 'yield' with the general verb 'to yield' (to give way, to surrender), though the underlying sense of 'producing' is related.

Fun facts

The term 'yield curve' is a crucial concept in bond markets, showing the relationship between the interest rate (or cost of borrowing) and the time to maturity of debt for a given borrower in a given currency.