REAL YIELD Meaning and
Definition
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Real yield is a financial term used to describe the rate of return on an investment after accounting for inflation. It is the actual return an investor earns on an investment, adjusted for the effects of inflation. Real yield provides a more accurate measure of the investment's true return, as it considers the purchasing power of the returns in real terms.
To calculate the real yield, the nominal yield (the stated or nominal rate of return) is adjusted by subtracting the expected inflation rate. This adjustment accounts for the fact that the purchasing power of money changes over time due to inflation. By focusing on real yield, investors can evaluate the investment's potential to grow their wealth in terms of goods and services rather than just nominal returns.
Real yield is particularly relevant for fixed-income securities, such as bonds and other debt instruments, where the stated interest rate or coupon payment may not reflect the true return considering the impact of inflation. It allows investors to assess how much their investment is truly growing in relation to the rising cost of living and preserve their purchasing power over time.
Monitoring the real yield is crucial for investors in making informed decisions about their investment portfolio, as it provides a clearer understanding of the potential value and growth of their investments in real terms.
Common Misspellings for REAL YIELD
- eeal yield
- deal yield
- feal yield
- teal yield
- 5eal yield
- 4eal yield
- rwal yield
- rsal yield
- rdal yield
- rral yield
- r4al yield
- r3al yield
- rezl yield
- resl yield
- rewl yield
- reql yield
- reak yield
- reap yield
- reao yield
- real tield
Etymology of REAL YIELD
The word "real" originates from the Latin word "rēālis", which means "actual" or "genuine". It entered English from the Old French word "reel", meaning "actual" or "true". The term "yield" comes from the Old English word "gieldan", meaning "to pay" or "to render". Therefore, the etymology of "real yield" would suggest that it refers to the actual or genuine return or profit generated from an investment or financial instrument, considering factors such as inflation or other adjustments.
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