When considering rolling yield, which of the following is added together?

The concept of rolling yield primarily involves two key components: yield income and rolldown return. Yield income refers to the income generated from holding a security, typically represented by interest or dividends. Rolldown return, on the other hand, represents the gains that investors can achieve as the security matures or are rolled down the yield curve as interest rates change.

When calculating rolling yield, it is essential to combine these two components. The yield income captures the immediate income from the investment, while the rolldown return accounts for the appreciation in value as the bond or fixed-income security approaches maturity or as market conditions change. This combination provides a comprehensive view of the total expected yield from holding the security over a designated period.

Thus, by adding yield income to the rolldown return, investors are able to assess the total return they can anticipate from their investment, factoring both the income they will receive and any potential capital appreciation as they approach the end of the investment horizon. This is crucial for making well-informed investment decisions, particularly in a changing interest rate environment.