Glossary - Y

This section provides an explanation for some of the jargon used to describe structured retail products. If you would like us to add additional words then please let us know by clicking here.

Yield

The term yield is used to describe the return produced by any financial asset. So for example the dividend yield of a share is the return produced by that share through the payment of dividends.

The most common use for the term is when describing bonds or a bond fund. In this case the yield is made up of the coupons or interest payments on the bond plus any expected change in its value up to maturity.

In order to calculate the yield on a bond therefore one must not only know the coupons payable but also the current price of the bond and its expected price at maturity.

Yield Curve

A yield curve is a term used to describe a set of yields for bonds of different maturities. There are many kinds of yield curves, for example, the government bond curve, the swaps curve, etc.