- yield gap
- yield gap ˈyield gap noun [countable] FINANCEthe difference between the amounts of interest on two types of bonds:
• The yield gap between the three-month bill and the 30-year bond widened to 213 basis points from 212.
* * *Also known as yield ratio. This ratio compares the dividend yield on equities from the yield on long-term government bonds. It is used to assess whether equities are under- or over-priced compared with government bonds. The dividend yield on equities (expressed as a percentage of the share price) is usually higher than the yield on bonds, reflecting the higher risk of holding equities. When equity prices rise, their dividend yields fall as a percentage of their price, thus reducing the yield ratio. When equity prices fall their yield rises. The thoery holds that if earnings yield is higher than bond yield then equities are cheap.► See also Dividend Yield.
* * *yield gap UK US noun [C] FINANCE
Financial and business terms. 2012.
Look at other dictionaries:
Yield Gap — or Yield Ratio is the ratio of the dividend yield of an equity and the yield of a long term government bond. Typically equities have a higher yield (as a percentage of the market price of the equity thus reflecting the higher risk of holding an… … Wikipedia
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yield gap — n. Finance the difference between the return on government issued securities and that on common stock … Useful english dictionary
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reverse yield gap — See yield gap … Big dictionary of business and management
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