Certificate in Mortgage Advice and Practice (CeMAP) 2 Practice Exam

Understanding yield in property investment comes down to what you’re measuring against price. Gross yield looks at the income from rent in relation to the purchase price, calculated as annual rent divided by the purchase price, shown as a percentage. Net yield goes a step further by taking away the running costs of the property from the rent first, then expressing that net income as a percentage of the purchase price. So the correct statement is that gross yield is rent as a percentage of the purchase price, and net yield is (rent minus running costs) as a percentage of the purchase price. The other options mix up these relationships—for example, adding or subtracting the wrong figures, or treating yields as raw rent or costs rather than as a percentage of price.