What is meant by investment yield?

Investment yield refers specifically to the return on investment from financial instruments, particularly bonds. This means that it encompasses the yield generated from the coupon payments of bonds, as well as any gains realized from selling the bond at a higher price than its purchase price.

In the context of bond proceeds, investment yield is crucial because it signifies how effectively the funds generated from the issuance of bonds are being utilized or invested. It serves as an indicator of the income generated from these investments relative to the amount invested, thus helping stakeholders evaluate the performance of their bond investments.

While stock investments can yield returns, that aspect falls outside the definition of investment yield as a term typically used in relation to bonds. Overall return from all financial investments encompasses a broader range of assets, further diluting the specific focus on bond proceeds. Lastly, while cash flow from bond coupon payments is a component of the yield from bonds, it does not encompass the total investment yield unless it includes potential capital gains or other returns associated with those bonds.