Yield gap

The yield gap or yield ratio is the ratio of the dividend yield of an equity and the yield of a long-term government bond. Typically equities have a higher yield (as a percentage of the market price of the equity) thus reflecting the higher risk of holding an equity. The yield gap or yield ratio is the ratio of the dividend yield of an equity and the yield of a long-term government bond. Typically equities have a higher yield (as a percentage of the market price of the equity) thus reflecting the higher risk of holding an equity. Yield Gap = Yield Ratio of Equity Yield Ratio of Bond {displaystyle {mbox{Yield Gap}}={frac {mbox{Yield Ratio of Equity}}{mbox{Yield Ratio of Bond}}}}