Financial Terms process quality yield

# Definition of process quality yield

## process quality yield

the proportion of good units that resulted from the activities expended

# Related Terms:

## Annual percentage yield (APY)

The effective, or true, annual rate of return. The APY is the rate actually
earned or paid in one year, taking into account the affect of compounding. The APY is calculated by taking
one plus the periodic rate and raising it to the number of periods in a year. For example, a 1% per month rate
has an APY of 12.68% (1.01^12).

## Bond equivalent yield

Bond yield calculated on an annual percentage rate method. Differs from annual
effective yield.

## Bond-equivalent yield

The annualized yield to maturity computed by doubling the semiannual yield.

## Capital gains yield

The price change portion of a stock's return.

## Convenience yield

The extra advantage that firms derive from holding the commodity rather than the future.

## Corporate processing float

The time that elapses between receipt of payment from a customer and the
depositing of the customer's check in the firm's bank account; the time required to process customer
payments.

## Coupon equivalent yield

True interest cost expressed on the basis of a 365-day year.

## Current yield

For bonds or notes, the coupon rate divided by the market price of the bond.

## Diffusion process

A conception of the way a stock's price changes that assumes that the price takes on all
intermediate values. dirty price. Related: full price

## Dividend yield (Funds)

Indicated yield represents return on a share of a mutual fund held over the past 12
months. Assumes fund was purchased 1 year ago. Reflects effect of sales charges (at current rates), but not
redemption charges.

## Dividend yield (Stocks)

Indicated yield represents annual dividends divided by current stock price.

## Earnings yield

The ratio of earnings per share after allowing for tax and interest payments on fixed interest
debt, to the current share price. The inverse of the price/earnings ratio. It's the Total Twelve Months earnings
divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is
shown in percentage.

## Effective annual yield

Annualized interest rate on a security computed using compound interest techniques.

## Equivalent bond yield

Annual yield on a short-term, non-interest bearing security calculated so as to be
comparable to yields quoted on coupon securities.

## Equivalent taxable yield

The yield that must be offered on a taxable bond issue to give the same after-tax
yield as a tax-exempt issue.

## Flattening of the yield curve

A change in the yield curve where the spread between the yield on a long-term
and short-term Treasury has decreased. Compare steepening of the yield curve and butterfly shift.

## Flight to quality

The tendency of investors to move towards safer, government bonds during periods of high
economic uncertainty.

See:junk bond.

## Indicated yield

The yield, based on the most recent quarterly rate times four. To determine the yield, divide
the annual dividend by the price of the stock. The resulting number is represented as a percentage. See:
dividend yield.

## In-house processing float

Refers to the time it takes the receiver of a check to process the payment and
deposit it in a bank for collection.

## Liquid yield option note (LYON)

Zero-coupon, callable, putable, convertible bond invented by Merrill

## Liquid yield option note (LYON)

Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co.

## Non-parallel shift in the yield curve

A shift in the yield curve in which yields do not change by the same
number of basis points for every maturity. Related: Parallel shift in the yield curve.

## Parallel shift in the yield curve

A shift in the yield curve in which the change in the yield on all maturities is
the same number of basis points. In other words, if the 3 month T-bill increases 100 basis points (one
percent), then the 6 month, 1 year, 5 year, 10 year, 20 year, and 30 year rates increase by 100 basis points as
well.
Related: Non-parallel shift in the yield curve.

## Price discovery process

The process of determining the prices of the assets in the marketplace through the

## Pure yield pickup swap

Moving to higher yield bonds.

## Quality option

Also called the swap option, the seller's choice of deliverables in Treasury Bond and Treasury
note futures contract. Related: cheapest to deliver issue

Also called credit spread, the spread between Treasury securities and non-Treasury securities
that are identical in all respects except for quality rating. For instance, the difference between yields on
Treasuries and those on single A-rated industrial bonds.

## Realized compound yield

yield assuming that coupon payments are invested at the going market interest
rate at the time of their receipt and rolled over until the bond matures.

The ratio of the yield spread to the yield level.

## Reoffering yield

In a purchase and sale, the yield to maturity at which the underwriter offers to sell the bonds
to investors.

## Required yield

Generally referring to bonds, the yield required by the marketplace to match available returns
for financial instruments with comparable risk.

## Riding the yield curve

Buying long-term bonds in anticipation of capital gains as yields fall with the
declining maturity of the bonds.

## Steepening of the yield curve

A change in the yield curve where the spread between the yield on a long-term
and short-term Treasury has increased. Compare flattening of the yield curve and butterfly shift.

## Weighted average portfolio yield

The weighted average of the yield of all the bonds in a portfolio.

## Yield

The percentage rate of return paid on a stock in the form of dividends, or the effective rate of interest
paid on a bond or note.

## Yield curve

The graphical depiction of the relationship between the yield on bonds of the same credit quality
but different maturities. Related: Term structure of interest rates. Harvey (1991) finds that the inversions of
the yield curve (short-term rates greater than long term rates) have preceded the last five U.S. recessions. The
yield curve can accurately forecast the turning points of the business cycle.

## Yield curve option-pricing models

Models that can incorporate different volatility assumptions along the
yield curve, such as the Black-Derman-Toy model. Also called arbitrage-free option-pricing models.

## Yield curve strategies

Positioning a portfolio to capitalize on expected changes in the shape of the Treasury yield curve.

## Yield ratio

The quotient of two bond yields.

Strategies that involve positioning a portfolio to capitalize on expected changes in
yield spreads between sectors of the bond market.

## Yield to call

The percentage rate of a bond or note, if you were to buy and hold the security until the call date.
This yield is valid only if the security is called prior to maturity. Generally bonds are callable over several
years and normally are called at a slight premium. The calculation of yield to call is based on the coupon rate,
length of time to the call and the market price.

## Yield to maturity

The percentage rate of return paid on a bond, note or other fixed income security if you
buy and hold it to its maturity date. The calculation for YTM is based on the coupon rate, length of time to
maturity and market price. It assumes that coupon interest paid over the life of the bond will be reinvested at
the same rate.

## Yield to worst

The bond yield computed by using the lower of either the yield to maturity or the yield to call
on every possible call date.

## Cost of quality

The difference between the actual costs of production, selling and service and the costs that would be incurred if there were no failures during production or usage of products or services.

## Process costing

A method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced.

## dividend yield ratio

Cash dividends paid by a business over the most
recent 12 months (called the trailing 12 months) divided by the current
market price per share of the stock. This ratio is reported in the daily
stock trading tables in the Wall Street Journal and other major newspapers.

## Bond Equivalent Yield

Bond yield calculated on an annual percentage rate method

## Effective Annual Yield

Annualized rate of return on a security computed using compound
interest techniques

## Yield Curve

A graphical representation of the level of interest rates for
securities of differing maturities at a specific point of time

## Yield to Maturity

The measure of the average rate of return that will be earned on a
debt security held until it matures

## accepted quality level (AQL)

the maximum limit for the number of defects or errors in a process

the process of combining information technology to create new and more effective
business processes to lower costs, eliminate unnecessary
work, upgrade customer service, and increase
speed to market

## cost-benefit analysis the analytical process of comparing the

relative costs and benefits that result from a specific course
of action (such as providing information or investing in a
project)

## FIFO method (of process costing)

the method of cost assignment that computes an average cost per equivalent
unit of production for the current period; keeps beginning
inventory units and costs separate from current period production
and costs

## joint process

a manufacturing process that simultaneously
produces more than one product line
joint product one of the primary outputs of a joint process;
each joint product individually has substantial revenuegenerating
ability

## labor yield variance

(standard mix X actual hours X standard rate) - (standard mix X standard hours X standard rate);
it shows the monetary impact of using more or fewer total hours than the standard allowed

## material yield variance

(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price);
it computes the difference between the
actual total quantity of input and the standard total quantity
allowed based on output and uses standard mix and
standard prices to determine variance

## modified FIFO method (of process costing)

the method of cost assignment that uses FIFO to compute a cost per
equivalent unit but, in transferring units from a department,
the costs of the beginning inventory units and the
units started and completed are combined and averaged

## multiprocess handling

the ability of a worker to monitor
and operate several (or all) machines in a manufacturing
cell or perform all steps of a specific task

## process benchmarking

benchmarking that focuses on practices and how the best-in-class companies achieved their results

## process complexity

an assessment about the number of processes through which a product flows

## process costing system

a method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products;
it accumulates costs by cost component in each production department and assigns costs to units using equivalent units of production

## processing time

the actual time consumed performing the
functions necessary to manufacture a product

## process map

a flowchart or diagram indicating every step
that goes into making a product or providing a service

## process productivity

the total units produced during a period

## product- (or process-) level cost

a cost that is caused by the development, production, or acquisition of specific products or services

## quality

all the characteristics of a product or service that
make it able to meet the stated or implied needs of the
buyer; it relates to both performance and value; the pride
of workmanship; it is conformance to requirements

## quality assurance

the process of determining that product
or service quality conforms to designated specifications
usually through an inspection process

## quality audit

a review of product design activities (although
not for individual products), manufacturing processes and controls, quality documentation and records, and management philosophy

## quality control

the implementation of all practices and policies
designed to eliminate poor quality and variability in the
production or service process; it places the primary responsibility
for quality at the source of the product or service

## statistical process control (SPC)

the use of control techniques that are based on the theory that a process has natural variations in it over time, but uncommon variations
are typically the points at which the process produces "errors", which can be defective goods or poor service

## strict FIFO method (of process costing)

the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the
cost of the beginning units separate from the cost of the
units started and completed during the current period

## total quality management (TQM)

a structural system for creating organization-wide participation in planning and implementing a continuous improvement process that exceeds
the expectations of the customer/client; the application
of quality principles to all company endeavors; it is also known as total quality control

## weighted average method (of process costing)

the method of cost assignment that computes an average cost per
equivalent unit of production for all units completed during
the current period; it combines beginning inventory units
and costs with current production and costs, respectively,
to compute the average

## yield

the quantity of output that results from a specified input

## yield ratio

the expected or actual relationship between input and output

## Ito process

Statistical assumptions about the behavior of security prices. For
details, see the book by Hull listed in the â€śBibliographyâ€ť.

## Par yield curve

The yield curve of bonds selling at par, or face, value.

See Zero curve.

## Yield

a. Measure of return on an investment, stated as a percentage of price.
yield can be computed by dividing return by purchase price, current market
value, or other measure of value.
b. Income from a bond expressed as an
annualized percentage rate.
c. The nominal annual interest rate that gives a
future value of the purchase price equal to the redemption value of the security.
Any coupon payments determine part of that yield.

## Yield curve

Graph of yields (vertical axis) of a particular type of security
versus the time to maturity (horizontal axis). This curve usually slopes
securities that have a longer time to maturity. The benchmark yield curve is
for U.S. Treasury securities with maturities ranging from three months to 30
years. See Term structure.

## Yield to maturity

A measure of the average rate of return that will be earned
on a bond if held to maturity.

## Zero curve, zero-coupon yield curve

A yield curve for zero-coupon bonds;
zero rates versus maturity dates. Since the maturity and duration (Macaulay
duration) are identical for zeros, the zero curve is a pure depiction of supply/
demand conditions for loanable funds across a continuum of durations and
maturities. Also known as spot curve or spot yield curve.

## Process

A series of linked activities that result in a specific objective. For example, the
payroll process requires the calculation of hours worked, multiplication by hourly
rates, and the subtraction of taxes before the final objective is reached, which is the
printing of the paycheck.

## Process costing

A costing methodology that arrives at an individual product cost through the calculation of average costs for large quantities of identical products.

## Production yield variance

The difference between the actual and budgeted proportions
of product resulting from a production process, multiplied by the standard unit cost.

## Work-in-process inventory

Inventory that has been partially converted through the
production process, but for which additional work must be completed before it can
be recorded as finished goods inventory.

## current yield

Annual coupon payments divided by bond price.

## yield curve

Graph of the relationship between time to maturity and yield to maturity.

## yield to maturity

Interest rate for which the present value of the bondâ€™s payments equals the price.

## Current Yield

The percentage return on a financial asset based on the current price of the asset, without reference to any expected change in the price of the asset. This contrasts with yield-to-maturity, for which the calculation includes expected price changes. See also yield.

## Yield

The interest rate that makes the present value of a stream of future payments associated with an asset equal to the current price of that asset. Also called yield to maturity. See also current yield.

## Yield curve

A graph showing how the yield on bonds varies with time to maturity.

## Purchased In-Process Research and Development

Unfinished research and development that is acquired from another firm.

## Process flow production

A production configuration in which products are continually
manufactured with minimal pauses or queuing.

## Reprocessed material

Material that has been reworked and returned to stock.

## Work-in-process

Any items being converted into finished goods or released from
the warehouse in anticipation of beginning the conversion process.