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Simple English definitions for legal terms
net yield
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A quick definition of net yield:
Net yield is the profit or loss you make on an investment after taking away all the costs and money set aside for potential losses. It's like figuring out how much money you have left over after paying for everything you need. Yield is usually expressed as a percentage of the investment, and there are different types of yield depending on the type of investment you have. For example, if you have a bond, you might look at the coupon yield or the current yield to figure out how much money you'll make from it.
A more thorough explanation:
Definition: Net yield is the profit or loss on an investment after deducting all appropriate costs and loss reserves. It is expressed as a percentage of the investment.
- Coupon yield: The annual interest paid on a bond divided by the bond's par value.
- Current yield: The annual interest paid on a bond divided by the bond's 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.
For example, if you invest $100 in a bond with a coupon yield of 5%, you will receive $5 in interest each year. If the bond's current market price is $90, the current yield would be 5.56% ($5/$90). However, if you deduct any costs or loss reserves from your profit, such as fees or potential losses, the resulting percentage would be the net yield.