What are the Components of Return
Return is fundamentally made up of two components:
- Periodic cash receipts or income on the investment in the form of interest, dividends, etc. The term yield is usually used in connection with the component of return. Yield refers to income derived from a security in relation to its price, generally its purchase price.
- Appreciation (depreciation) in the price of the asset is referred to as capital gain (loss). This is the difference between purchase price and price at which asset can be, or is, sold.