Xx
Xetra
An international platform for
trading in equities and war-
rants. Set up by the Deutsche Börse, it covers securities
quoted on the Frankfurt Stock Exchange. A boon for investors is
that they can continue to trade in securities
on Xetra after Wall
Street has opened for business in the morning.
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Yy
Yankee bond
A bond issued in the US capital markets by a non-US
borrower.
Yearling
A one-year bond issued by a local authority in the UK.
Yellow sheet
A daily list published in the United States by the National Asso-
ciation of Securities Dealers that
is to bonds what the pink
sheet is to stocks: a list of prices and of firms that are in the
market for over-the-counter corporate bonds.
Yield
The annual income in dividends or interest from a secu-
rity, expressed as a percentage of the
market price of the secu-
rity. Thus a bond with a face value of $100, a coupon of 10%
and a market price of $50, has a yield of 20%.
earnings yield is the rate of return to shareholders
if all their company’s earnings are distributed as
dividends.
The yield gap is the difference
between the yield on a
reputable index of equities and the yield on bonds, as
measured by a standard gilt-edged government bond.
This is usually positive since equities are riskier than
bonds (and therefore higher-yielding).
On occasions,
however, the yield on bonds is higher than that on
equities, and there is then said to be a reverse yield gap.
(See also inverse yield curve and redemption yield.)
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Yield curve
The shape of a graph plotted to show the structure of interest
rates. Since the rate for long-term financial
instruments is
higher than for short-term ones, the curve usually slopes
upwards from the bottom left-hand
corner to the top right-hand
corner (assuming that rates are on the vertical axis and matu-
rity is on the horizontal axis). However, in circumstances
where the market expects that a currently
high rate of infla-
tion will soon fall rapidly, the curve can slope the other way.
(See inverse yield curve.)
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