Investing · Video Lesson
What is Yield? How to Calculate
Yield measures the income an investment generates relative to its price. This lesson defines yield, distinguishes it from total return, and teaches the percent-yield formula with worked examples for both bond interest and stock dividends.
For Teachers
Lesson at a glance
- Topic
- Investing
- Grade Level
- Grades 9–12 + adult
- Resource Type
- Video Lesson + Worksheet
- Estimated Time
- 45–60 minutes
- Format
- Direct instruction + practice
- Materials
- Video, worksheet, calculators, whiteboard
What Students Learn
Learning objectives
- Define yield as annual income divided by an investment’s value
- Distinguish yield from total return (which includes gains and losses)
- Apply the percent-yield formula: Yield = Annual Income / Investment Value
- Calculate the yield of a bond from its coupon and price
- Calculate the dividend yield of a stock from its dividend and price
Video Lesson
Watch: What is Yield? How to Calculate
Materials
What you’ll need
- Internet access for the video
- Printed copies of the worksheet (one per student)
- Calculators
- Whiteboard or projector to work examples
Key Terms
Vocabulary
- Yield
- The annual income an investment generates, divided by its value, shown as a percentage.
- Return (ROI)
- The overall profit or loss on an investment, including gains — not the same as yield.
- Coupon
- The interest a bond pays its holder, often semi-annually.
- Dividend
- A share of profits a company pays to its stockholders, often quarterly.
- Bond
- A loan to a government or company that pays interest over time.
- Dividend yield
- A stock’s annual dividend divided by its share price, as a percentage.
- Annual income
- The total interest or dividends an investment pays in a year.
For Teachers
Lesson plan
Estimated time: one 45–60 minute class period.
Lesson sequence
- Introduction (6 min). Ask: if two investments both pay $50 a year, but one costs $900 and the other $1,200, which is the better deal? Introduce yield as the way to compare.
- Watch the video (10 min). Play the lesson video. Ask students to note the yield formula and the difference between yield and return.
- The formula (12 min). Teach Yield = Annual Income / Investment Value × 100, and clarify why yield (income only) differs from total return.
- Worked examples (12 min). Bond: a 5% coupon bond ($50/yr) priced at $900 → 50 / 900 = 5.56%. Stock: a $1.00 quarterly dividend ($4/yr) on a $100 share → 4 / 100 = 4.0%.
- Worksheet (8 min). Students complete the worksheet, calculating yields on their own.
Extension
- Compare investments. Students compute the yield of two given investments and explain which provides more income per dollar invested.
Assessment
Assess the worked examples and the completed worksheet calculations.
This lesson is for educational purposes only and is not investment advice.
Discussion
Discussion questions
- What does yield measure, and why is it useful when comparing investments?
- How is yield different from total return on an investment?
- How do you calculate the yield of a bond from its coupon and price?
- How do you calculate the dividend yield of a stock?
- Why can two investments paying the same income have different yields?
Printable Worksheet
What is Yield? — Practice Worksheet
Short-answer practice worksheet based on the video for students to calculate yield.
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