American Financial Services Investment Glossary Click on a letter below to browse the Investment Glossary. An investment's return from dividends or interest expressed as a percentage of either cost at purchase or the investment's current price. When an investor buys a corporation's convertible security instead of its common stock, the yield advantage is the additional amount of return an investor can earn. In general, the yield curve is positive.
Investors usually receive a higher yield for the extra risk of tying up their money long term.
To make a sound judgment about the direction of interest rates, fixed income analysts and economists will carefully watch the yield curve. The interest rate at which a taxable security and a tax-exempt bond have the same rate of return. Life Calculation used, where bonds are retired systematically during the life of the issue, as in a sinking fund. To satisfy its sinking fund requirements the issuer will buy its bonds on the open market. If the bonds are trading below par, there is automatic price support for such bonds.