What characterizes a high-yield investment?

A high-yield investment is characterized by providing a high income stream relative to its low market price. This often refers to investments that offer substantial returns through dividends, interest, or other income streams compared to their cost or market value. Such investments may include bonds, real estate investment trusts (REITs), or stocks of companies with high dividend yields.

The focus on a high income stream highlights that these investments can generate significant cash flow, which is attractive to investors seeking immediate income rather than just long-term appreciation. The low market price suggests that the investment is perceived as having higher risk, but the potential return justifies the risk taken by the investor.

In contrast, other options describe different characteristics of investments that may not align with the definition of high-yield. Investments described as having low risk with moderate returns or guaranteed returns over time typically align with more conservative investment strategies, focusing on stability and reduction of risk. Investment in stable companies usually indicates lower volatility and therefore lower potential returns, as established businesses may not provide the high yields that come with greater risk.