11:44
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Simple English definitions for legal terms
earnings yield
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A quick definition of earnings yield:
Earnings yield is a way to measure how much money you can make from an investment. It's calculated by dividing the earnings per share of a security by its market price. The higher the ratio, the better the investment yield. It's like asking how much money you can make from a certain amount of money you put in. It's important to know the earnings yield before investing your money.
A more thorough explanation:
Definition: Earnings yield is the ratio of a company's earnings per share to its market price per share, expressed as a percentage. It is a measure of the return on investment for a stock.
Examples:
- If a company has earnings per share of $5 and a market price per share of $100, its earnings yield would be 5%.
- A company with earnings per share of $2 and a market price per share of $50 would have an earnings yield of 4%.
These examples illustrate how earnings yield is calculated by dividing a company's earnings per share by its market price per share. The resulting percentage can be used to compare the return on investment for different stocks.