Future Business Leaders of America (FBLA) Securities and Investments Practice Test

Yield refers to the income return on an investment, expressed as a percentage of the investment’s cost or current market value. This concept is vital for investors as it provides a measure of the return on an investment relative to its price, allowing them to evaluate the performance of their investments against others or against market benchmarks.

In practical terms, yield can include interest payments from bonds, dividends from stocks, or rental income from real estate. By calculating yield, investors can assess how much income they are earning from their investment and make informed decisions based on their financial goals and the performance of their portfolio.

Understanding yield helps investors to compare different types of investments effectively. For instance, a bond that offers a higher yield than a savings account may be more attractive, despite the higher risk, depending on the investor's risk tolerance and financial objectives. This makes yield a critical figure in investment decision-making.

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