Required yield

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Required yield

Generally referring to bonds; the yield required by the marketplace to match available expected returns for financial instruments with comparable risk.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Required Yield

In securities, the minimum acceptable yield at a given level of risk. Different investors have different reasons for choosing their required yields. Normally, a person's or institution's cost of capital determines it. For example, an investor may also carry a debt with a high interest rate; if an investment does not meet a required yield, it would make more sense for the investor to pay down his/her debt. The required yield is also related to the amount of risk an investor is willing to accept. One with a portfolio consisting largely of bonds will generally have a lower required yield than one whose portfolio contains mainly stocks. See also: Markowitz Portfolio Theory.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Property values are a function of property incomes and investors' required yields (aka capitalization or cap rates).The cap rate is calculated as a property's earnings divided by its value, or the net operating income divided by the property sales price.
While this reflects the extremely low interest rate environment we are currently experiencing, it is also a testament to the low required yields demanded by investors.
Delixivia is suitable for a whole range of extended cooked meats and enables manufacturers to achieve required yields and meat contents.
Hence, required yields should increase on TIIS whenever expected inflation rises and vice versa (Kopcke and Kimball, 1999).
This scenario, while giving consideration to market indicators, is one whereby greater emphasis is placed on the investor's required yields. This investor assumes the risk in the capital markets should rates, terms, and the availability of financing change during the construction period.
The product provides the opportunity to produce required yields and meat contents in a wide range of extended cooked meats, without the need to use phosphates and gums.
Overly pessimistic rent projections (which decrease values) are offset by overly optimistic risk assessment (which decreases required yields and increases values).(8)
Rather, all before-debt (and before-tax) payments are discounted by the required yield rate.
Obviously, as mortgage bankers, any product or program we developed to meet consumer and Realtor/builder needs also had to be structured within secondary market guidelines and required yields.
This is only possible, however, if information about the investor's required yields is provided.(12) Further, market-derived after-tax equity yields should be used, because these are the yields actually used by investors who establish financial yields and values.