Current Yield
A bond's annual coupon payment divided by its current market price — a simple but incomplete measure of yield that ignores capital gain or loss.
Formula
Current Yield = Annual Coupon Payment / Current Market Price
Current yield is the simplest yield measure: annual coupon income as a percentage of the bond's current price. It tells you how much income the bond generates today relative to what you pay for it, but it ignores the difference between purchase price and face value at maturity.
For bonds trading at par, current yield equals the coupon rate. For discount bonds, current yield exceeds the coupon rate. For premium bonds, it is lower. YTM is more accurate for total-return comparison — current yield is a quick back-of-envelope check.
Related Terms
Bond Yield
The return an investor earns by holding a bond — driven by its price, coupon, and time to maturity. Moves inversely with price.
BeginnerCoupon
The fixed annual interest payment made by a bond issuer to the bondholder, expressed as a percentage of face value.
BeginnerFace Value (Par)
The nominal value of a bond that the issuer promises to repay at maturity — typically $1,000 for U.S. bonds.
Beginner