SIMPLE YIELD Meaning and
Definition
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Simple yield refers to the return on an investment expressed as a percentage of the original investment amount. It is a straightforward measure that enables investors to evaluate the profitability of their investment without considering the impact of compounding or the duration of the investment.
The formula used to calculate simple yield is relatively simple: divide the annual income or profit generated by the investment by the initial amount invested, and then multiply the result by 100 to express it as a percentage.
For example, if an individual invests $1,000 in a bond and receives $100 in annual interest, the simple yield would be calculated as ($100/$1,000) * 100 = 10%. This means that the investment is yielding a 10% return on the original investment amount.
Simple yield is different from compound yield, which takes into account the effect of reinvesting earnings and the length of the investment period. Simple yield provides a more immediate and easy-to-understand measure of a return on investment.
However, it is important to note that simple yield does not take into consideration any fluctuations in the value of the investment or changes in the market conditions. It is solely focused on measuring the profitability of the investment based on the income generated. Therefore, simple yield should be used in conjunction with other financial metrics to make a well-informed investment decision.
Common Misspellings for SIMPLE YIELD
- aimple yield
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- simole yield
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- simpke yield
Etymology of SIMPLE YIELD
The word "yield" originated from Middle English, derived from the Old English word "gieldan" which means "to pay, give, or render". The term "simple" has Latin roots, coming from the Latin word "simplex" meaning "plain" or "uncomplicated". Hence, the etymology of "simple yield" suggests a straightforward or uncomplicated payment or return.
