yield gap

yield gap
yield gap ˈyield gap noun [countable] FINANCE
the 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.

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   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.

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yield gap UK US noun [C] FINANCE
YIELD SPREAD(Cf. ↑yield spread)

Financial and business terms. 2012.

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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

  • yield gap — The difference between the average annual dividend yield on equity and the average annual yield on long dated gilt edged security Before the 1960s yields obtained from UK equities usually exceeded the yields provided by long dated UK gilts,… …   Big dictionary of business and management

  • yield gap — n. Finance the difference between the return on government issued securities and that on common stock …   Useful english dictionary

  • reverse yield gap — noun (commerce) The amount by which the average yield on the shares making up the Financial Times ordinary index, or the return on any particular stocks, falls short of the return on 21/2% consolidated annuities • • • Main Entry: ↑reverse …   Useful english dictionary

  • reverse yield gap — See yield gap …   Big dictionary of business and management

  • yield spread — The difference in yield between different security issues usually securities of different credit quality. Bloomberg Financial Dictionary * * * yield spread yield spread ➔ spread2 * * * yield spread UK US noun [C] ► ( …   Financial and business terms

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  • Yield Curve — A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares the three month, two year, five year and 30 year U.S. Treasury… …   Investment dictionary

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  • Info-gap decision theory — is a non probabilistic decision theory that seeks to optimize robustness to failure – or opportuneness for windfall – under severe uncertainty,[1][2] in particular applying sensitivity analysis of the stability radius type[3] to perturbations in… …   Wikipedia

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