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People often use yield and return interchangeably, referring to what you'll earn from a fixed investment. However, there are some important differences to note for yield vs return.
Current Yield – But now consider how yield changes if the price of that same bond falls. If the bond mentioned above is resold for $800 it results in a current yield of 6.25%.
Multiply by 365/7 to give the 7-day SEC yield. To calculate approximately how much interest one might earn in a money fund account, take the 7-day SEC yield, multiply by the amount invested, divide by the number of days in the year, and then multiply by the number of days in question. This does not take compounding into effect.
The yield to maturity (YTM), book yield or redemption yield of a fixed-interest security is an estimate of the total rate of return anticipated to be earned by an investor who buys it at a given market price, holds it to maturity, and receives all interest payments and the capital redemption on schedule. [1] [2]
An annual rate of return is a return over a period of one year, such as January 1 through December 31, or June 3, 2006, through June 2, 2007, whereas an annualized rate of return is a rate of return per year, measured over a period either longer or shorter than one year, such as a month, or two years, annualized for comparison with a one-year ...
Yield and interest are highly-related when it comes to bonds. Your yield is based on the interest payments generated by a bond. However, because yield is the total profit you make based on your ...