The term that describes the income return on an investment?

• A. Yield
• B. Dividends
• C. Capital Asset
• D. Prospectus

Answer: (A)

Income return on an investment is described by its yield. Yield is the return expressed as a percentage of the investment’s price or cost, typically shown on an annual basis. It focuses on the cash income you actually receive, such as interest or dividends, relative to what you paid for the investment. For example, if a stock pays $3 in dividends each year and the stock costs $60, the dividend yield is 5% (3 ÷ 60).

Dividends are the actual cash payments received from the investment, not the rate itself. A capital asset is a type of asset, not a term describing income return. A prospectus is a document that explains the details of a security.