Glossary: y

Yield: The amount of income return on an investment such as interest, rent, dividends or from holding a particular security. The yield is typically expressed as an annual percentage rate based on the investment’s cost, current market value or face value.

 

Yield compression: The rate of growth; a combination of rental and capital growth. Capital growth is often rental dependant. Yield compression is essentially a gamble between interest rates, taking into account the cost of borrowing versus the yield.

 

Yield curve: A curve on a graph in which the yield of fixed-interest securities is plotted against the length of time they have to run maturity.

 

Yield hardening/softening: The movement of yields (usually, but not always, referring to equivalent yields) over a period of time. A hardening of yields refers to yields falling (ie capital values are rising) while a softening refers to yields rising (ie capital values are falling).

 

Yield to maturity (YTM): Overall internal rate of return earned by an investor who buys a share/bond at today’s market price, assuming that the value will be held until maturity. The YTM is often given in terms of Annual Percentage Rate (APR).

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