high yield
Definition
Description of investments with high rates of return. Generally, a high yield bond will be ranked very low by a rating agency, because these are bonds which have a relatively high chance of default, and therefore have to offer higher returns. Similarly, a stock will offer a high dividend yield in order to compensate for lower expected capital gains, for example a large company in a mature industry which is no longer growing.
Use high yield in a sentence
“ You should try and make sure you are fully prepared to handle any swings when you are dealing with a high yield. ”
“ The investors were willing to tolerate some risk and chose to put their capital into a sector with low short-term growth but a markedly high yield. ”
“ An asset whose current income (dividend or interest) yield is relatively high compared to its peers is called high yield; these investments generally carry with them correspondingly higher degrees of risk, and in the case of bonds, lower ratings. ”
