Legal Definitions - yield on investment

Definition: Yield on investment refers to the profit earned as a percentage of the investment. It is also known as return or rate of return.

• Coupon Yield: The annual interest paid on a bond divided by its par value.
• Current Yield: The annual interest paid on a bond divided by its current market price.
• Discount Yield: The yield on a security sold at a discount.
• Earnings Yield: The earnings per share of a security divided by its market price.
• Net Yield: The profit or loss on an investment after deducting all appropriate costs and loss reserves.

For example, if you invest $1000 in a bond that pays an annual interest of $50, the yield on investment would be 5% ($50/$1000).

Another example would be if you buy a stock for $50 per share and it earns $2 per share in a year, the earnings yield would be 4% ($2/$50).

These examples illustrate how yield on investment is calculated and how it can be used to evaluate the profitability of an investment.