yield gap

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yield gap

the difference between the YIELD on established undated or long dated gilt-edged BONDS and the average yield on SHARES. Before 1960, the yield on gifts was less than the yield on shares, and it was argued that such a gap was justified by the greater riskiness or variability in the return on shares. However, since about 1960, some countries like the UK have experienced a reverse yield gap with the yield on gifts exceeding the yield on shares as a result of high inflation and high interest rates.