What does yield typically indicate about an investment?

Yield is a key financial metric used to describe the income generated by an investment relative to its cost or market value. It is often expressed as a percentage, indicating how much money an investor can expect to earn over a specific period, usually annually. This is particularly relevant in the context of various types of investments, such as stocks, bonds, and real estate.

When yield is evaluated, it provides insight into the performance and attractiveness of an investment. For instance, a higher yield may indicate a more favorable investment opportunity, whereas a lower yield might suggest that the investment is underperforming. Investors typically look at yield to assess how efficiently their money is being utilized and to compare different investment options.

In contrast, the other choices do not accurately reflect what yield signifies. Total cost pertains to the overall expenses involved in acquiring the investment, the effectiveness of management refers to how well a company or fund is run and does not directly relate to the financial returns, and the duration of the investment speaks to the length of time the money is expected to be tied up rather than the return percentage. Therefore, yield specifically points to the percentage of return on investment, making the choice regarding the percentage of return the correct interpretation.