Glossary
Yield: definition
Yield is a measure of income relative to price. On a bond it is the return implied by the price and the remaining payments, under assumptions. On a share it is usually the dividend divided by the price. Both move when the price moves.
In practice
A rising dividend yield caused by a crashing price is not good news until you know whether the dividend will be paid. A bond yield rising means bond prices falling. “Chasing yield” means accepting more credit risk, more illiquidity or more leverage to receive a larger coupon. Private credit and P2P pages on this site exist because those yields are often quoted before losses. Tax changes the yield you keep and depends on the country and the wrapper.
A worked example
A bond bought above par has a yield below its coupon. The coupon is the cash rate on face value. The yield is the economic rate given the price you actually paid.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- Investor.gov — checked 2026-10-13
- International Monetary Fund — checked 2026-10-13