16 What is the difference between yield and return?
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This article is from the FAQ, by with numerous contributions by others.
16 What is the difference between yield and return?
Do not confuse the two terms.
Return is sometimes called total return. The formula for total return
(ignoring any taxes paid on gains and income during the holding period) is:
TR=((Ending Market Value)/(Beginning Market Value))-1
Yield is a very different number --- it is prospective
not retrospective. It is a measure of income not
capital gains. It is usually associated with debt not
equity. For instance, the yield quoted on a bond will almost never
be the same as the total return realized after the bond
matures or is sold.
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