What is yield in the context of community association investments?

What is yield in the context of community association investments?

• A. The total amount invested.
• B. The amount of return on an investment.
• C. The risk-adjusted probability of profit.
• D. The maximum allowable loss.

Answer: (B)

Yield is the return an investment generates, usually shown as either a dollar amount of income or as a percentage of the amount invested. In community associations, yield helps managers compare how much income reserve funds or other investments produce over a period, typically annually. For example, if a reserve fund of 10,000 earns 500 in a year, the yield is 500 dollars or 5% if you express it as a percentage. Yield focuses on the income produced, not the total principal invested, and it doesn’t account for risk or potential losses, which are separate considerations.

Yield is the return an investment generates, usually shown as either a dollar amount of income or as a percentage of the amount invested. In community associations, yield helps managers compare how much income reserve funds or other investments produce over a period, typically annually. For example, if a reserve fund of 10,000 earns 500 in a year, the yield is 500 dollars or 5% if you express it as a percentage. Yield focuses on the income produced, not the total principal invested, and it doesn’t account for risk or potential losses, which are separate considerations.