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YIELD: The rate of return on a financial asset. In some simple cases, the yield on a financial asset, like commercial paper, corporate bond, or government security, is the asset's interest rate. However, as a more general rule, the yield includes both the interest earned from an asset plus any changes in the asset's price. Suppose, for example, that a $100,000 bond has a 10 percent interest rate, such that the holder receives $10,000 interest per year. If the price of the bond increases over the course of the year from $100,000 to $105,000, then the bond's yield is greater than 10 percent. It includes the $10,000 interest plus the $5,000 bump in the price, giving a yield of 15 percent. Because bonds and similar financial assets often have fixed interest payments, their prices and subsequently yields move up and down as economic conditions change.
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ABSOLUTE ADVANTAGE The general ability to produce more goods or services using fewer resources. A person or country has an absolute advantage in production largely due to superior technology or greater technical efficiency. A related, but contrasting concept is comparative advantage. Both terms are perhaps most important to the study of international trade, but also provide insight into other exchanges.
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BROWN PRAGMATOX
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Today, you are likely to spend a great deal of time driving to a factory outlet wanting to buy either a bookshelf that will fit in your closet or a birthday greeting card for your grandfather. Be on the lookout for celebrities who speak directly to you through your television.
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Two and a half gallons of oil are needed to produce one automobile tire.
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"In the business world, everyone is paid in two coins: cash and experience. Take the experience first; the cash will come later. " -- Harold S. Green, MCI founder
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RJE
RAND Journal of Economics
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