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Yield  

Meaning

Yield refers to the financial return or growth derived from an investment,  indicating the profit earned relative to the initial capital invested.


Example :

For example, if an individual invests ₹10,000 in a fixed deposit and earns ₹500  in interest over one year, the yield is calculated as 5%.


How to Understand : 

Yield is a fundamental metric that quantifies the growth of an investment, reflecting its  performance over time.


Importance :

1.  It facilitates comparisons among different investment options, enabling investors to  identify the most advantageous opportunities.
2.   Yield serves as a critical indicator of investment performance, helping investors evaluate  the effectiveness of their financial strategies.
3. This metric is instrumental in planning long-term financial objectives, such as funding  higher education or achieving significant purchases.
4.  A comprehensive understanding of yield encourages informed investing decisions,  guiding individuals toward optimal investment choices.

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