Yield Variance

Yield variance is the difference between the expected yield and the actual yield. It is a measure of the riskiness of an investment. The higher the yield variance, the riskier the investment.

Yield variance can be calculated using the following formula:

Yield variance = (Actual yield - Expected yield)^2

Where:

• Actual yield is the actual return on the investment.
• Expected yield is the expected return on the investment.

Yield variance can be used to compare different investments and to make decisions about which investments to invest in.

For example, if you are considering investing in two different stocks, you could compare the yield variances of the two stocks to see which one is riskier. The stock with the higher yield variance is riskier because it is more likely to have a lower return than the expected return.

Yield variance can also be used to track the performance of an investment over time. By comparing the yield variance of an investment over time, you can see how the riskiness of the investment has changed.

Yield variance is an important concept for investors to understand because it can help them make informed decisions about their investments.