Investopedia defines Yield as, "The income return on an investment.” This refers to the interest or dividend an investor receives from a security (such as a bond or a stock) and is usually expressed as an annual percentage, based on the investment cost or its face value.
For example if an ABC company pays a quarterly dividend of 50 cents ($.05) and the stock price is US$50, then the annual yield would be 4%, calculated by multiplying the dividend amount with number of quarters and dividing the answer by the stock price. If the stock price increases to become US$100, with the dividend remaining constant, the yield would become 2%.
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Interest Rate is defined by Investopedia as, "The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets." In order to understand this better, consider this example - You go to a bank to borrow $100,000 for a new car and the bank quotes you a 5% interest rate on the loan. If you have borrowed the money for one year, then after 12 months you will return $100,000 plus $5000 as the interest.
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