Which term is the income return on an investment?

• A. Dividends
• B. Capital Asset
• C. Yield
• D. Capital Gain and Loss

Answer: (C)

Income return refers to the cash flow an investment generates relative to its cost, and the term that captures that concept is yield. Yield expresses the income as a percentage of price or cost, such as dividend yield (annual dividends divided by price) or current yield on a bond (annual interest divided by price). This focuses on the ongoing income from the investment rather than changes in the asset’s price.

Dividends are a form of income, but they’re a component of yield rather than the overall measure of income return. Capital gains and losses, and capital assets, describe price changes or the type of asset, not the income earned.