high yield


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.

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You should try and make sure you are fully prepared to handle any swings when you are dealing with a high yield.

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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.

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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.

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