This Week’s $$ Word: YIELD
The interest rate you get paid when you buy a security, expressed by percent. With a bond, you’ll notice it has something called “YTM,” “yield” or “yield-to-maturity,” which tells you the rate of return you will receive if you hold the bond until maturity. For example, if you buy a ten-year $10,000 at 6% “yield,” you’ll receive $600 per year for ten years, on top of the $10,000 you originally invested. Stocks also have yields, often called dividend yields. Invest $10,000 in a stock with a 3% dividend yield and you’ll receive $300 per year in cash.
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