Break-Even Yield

Break-Even Yield

The yield necessary to cover costs and prevent a firm from operating at a loss. The breakeven yield may be relatively stable or it may fluctuate, depending on the company or industry. Companies with high breakeven yields tend to have large fluctuations in earnings from year to year. Calculating the breakeven yield is an important part of risk analysis.
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Assuming an expected default rate in 1991 of 10% and a 30% recovery rate (both reasonable assumptions) and a coupon rate of 12% on high-yield bonds, the break-even yield would have been 17.33% (Exhibit 16).
Since the break-even yield is earned only on that part of the portfolio which does not default (1 - [D.sub.f]), the formula for calculating break-even yields (BEY) is: [Mathematical Expression Omitted]
"The challenge for the casino, since the casino does subsidize a lot of this travel is to make sure they get a break-even yield on people playing.
At current costs, the break-even yield for fungicide and its application allows for economical use of fungicides in commercial maize in South Africa.
For example, a farmer can evaluate which crops to plant for maximum profit and how changes in crop prices would influence income, cash flow, and break-even yields. Even equipment purchases can be figured in.
We then compared these potential yields with "break-even yields" that we estimated using data on costs of conversion and drainage, costs of production, and expected market prices for barley, corn, cotton, oats, rice, sorghum, soybeans, and wheat.