Roll Yield

Roll yield is the return on an investment that is rolled over from one period to the next. It is calculated as the difference between the interest rate on the new investment and the interest rate on the old investment.

Roll yield can be positive or negative. A positive roll yield means that the new investment is paying a higher interest rate than the old investment. A negative roll yield means that the new investment is paying a lower interest rate than the old investment.

Roll yield is important because it can affect the overall return on an investment. For example, if an investor is rolling over a bond from one period to the next, a positive roll yield will increase the return on the investment. A negative roll yield will decrease the return on the investment.

Roll yield is also important because it can affect the risk of an investment. A positive roll yield means that the investor is locking in a higher interest rate. This can reduce the risk of the investment. A negative roll yield means that the investor is locking in a lower interest rate. This can increase the risk of the investment.

Roll yield is a complex concept that can be difficult to understand. However, it is an important concept for investors to understand because it can have a significant impact on the return and risk of an investment.