Required yield

Required yield

Generally referring to bonds; the yield required by the marketplace to match available expected returns for financial instruments with comparable risk.

Required Yield

In securities, the minimum acceptable yield at a given level of risk. Different investors have different reasons for choosing their required yields. Normally, a person's or institution's cost of capital determines it. For example, an investor may also carry a debt with a high interest rate; if an investment does not meet a required yield, it would make more sense for the investor to pay down his/her debt. The required yield is also related to the amount of risk an investor is willing to accept. One with a portfolio consisting largely of bonds will generally have a lower required yield than one whose portfolio contains mainly stocks. See also: Markowitz Portfolio Theory.