Yield and return
This query is : Resolved
22 May 2015
Can u any body give the difference between "Yield and Return" in simple language to understand.
CA. Sunil Gokhale
(Expert)
28 May 2015
An investments may provide income as well as capital gain/loss if the value of the investment itself is likely to change. For example, if you keep a fixed deposit with a bank then it will provide interest income but the value of the deposit itself will not change. But if you invest in a share it will provide dividend income but there may be capital gain/loss at the end of the year because the value of the share itself can rise or fall.
Yield takes into consideration only the income from the investment and return taken into consideration both income as well as capital gain/loss.
The expression yield to maturity will take into consideration the capital gain/loss that arises if an investment is held till its maturity.
Yield takes into consideration only the income from the investment and return taken into consideration both income as well as capital gain/loss.
The expression yield to maturity will take into consideration the capital gain/loss that arises if an investment is held till its maturity.
CA. Sunil Gokhale
(Expert)
29 May 2015
Not relevant. Risk means uncertainty. Dividend income from a share is the yield from the share but dividend is uncertain. So it is not always that capital gain/loss is the risk involved in an investment.
CA. Sunil Gokhale
(Expert)
29 May 2015
Mentioned it in earlier reply. Yield is only income from investment whereas return is income plus capital gain/loss on investment. Sometimes the two terms are used interchangeably in examination questions but there is a difference. Both are expressed as a percentage per annum.
CA. Sunil Gokhale
(Expert)
29 May 2015
Suppose you buy a share for Rs.100 at the end of the year you receive Rs.10 as dividend and the share price has gone up to Rs.120.
Income from share is Rs.10
Return on share = Rs.10 (dividend) + Rs.20 (capital gain) = Rs.30
Yield = 10% on original investment of Rs.100
Return = 30% on original investment of Rs.100 even if you do not sell the share.
Income from share is Rs.10
Return on share = Rs.10 (dividend) + Rs.20 (capital gain) = Rs.30
Yield = 10% on original investment of Rs.100
Return = 30% on original investment of Rs.100 even if you do not sell the share.
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