Glossary

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We believe a glossary is key for any client trying to navigate through the range of complex terms and jargon in our industry.

Our most frequently defined terms are defined below but if there's something you think we should add, please contact us.

Y

Yield

The percentage return paid on a stock in the form of a dividend or the effective rate of interest paid on a bond.

Yield curve

A sloping line that plots the yields of bonds from the same issuer but which have differing maturity dates. In a typical yield curve, the line will slope upwards, reflecting the fact that long-dated bonds should yield more than shorter-dated bonds. An inverted yield curve is where long-dated bonds yield less than short-dated bonds. This unusual situation may reflect a number of scenarios, including unusual demand/supply dynamics (for instance pension fund demand for long-dated assets to match their liabilities), or the fact that the market expects interest rates to decline and/or an economy to fall into recession.

Yield spread

The difference in yields available on different types of bond, for example between gilts and corporate bonds.

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