👉 Yields, in finance, represent the return on an investment over a specific period, often expressed as an annual percentage rate (APR). They can be calculated using different methods depending on whether the yield is based on current prices, future prices, or cash flows. The most common yield calculations include the Current Yield (CY), which is the annual dividend per share divided by the stock's current market price, and the Dividend Yield (DY), which is the annual dividend per share divided by the stock's current market price. For bonds, yields are often calculated using the Coupon Rate (the fixed interest rate paid annually) and the bond's current market price. Yield to Maturity (YTM) is a more comprehensive measure, taking into account the bond's current price, face value, coupon payments, and time to maturity, providing an estimate of the total return if the bond is held until it matures. Each yield metric offers a different perspective on investment returns, helping investors compare and evaluate potential investments based on their expected income streams.
