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Click on any letter below to browse our list of financial terms or enter key words below to focus your search.
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| Definitions |
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Yankee bond Yankee bonds are bonds issued in dollars in the US by
overseas companies and governments. The purpose is to raise more
money than the issuers may be able to borrow in their home markets,
either because there is more money available for investment in the
US, or because the interest rate the issuers must pay to attract
investors is lower.
US investors buy these bonds as a way to
diversify into overseas markets without the potential drawbacks of
currency fluctuation, foreign tax, or different standards of
disclosure that may be characteristic of other
markets. |
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Yield Yield is the rate of return on an investment, paid in
dividends or interest and expressed as a percent.
In the case of
stocks, the yield on your investment is the dividend you receive per
share divided by the stock's price per share. With bonds, it is the
interest divided by the price.
In the case of bonds, the yield on
your investment and the interest rate your investment pays are
sometimes-but by no means always-the same. If the price of a bond
moves higher or lower than par, the yield will be different from the
interest rate. For example, if you pay $950 for a bond with a par
value of $1,000 that pays 6% interest, your yield is 6.3%. But if you
paid $1,100 for the same bond, your yield would be only 5.5%.
Yield
can usually be calculated by dividing the amount you receive annually
in dividends or interest by the amount you spent to buy the
investment.
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YIELD
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Dividends or interest
you receive
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= Yield |
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What you invested
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For example:
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$60 (Interest)
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= 6.3% (Yield) |
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$950 (Invested)
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