




Current yield is equal to a bond's annual interest payment divided by its current market price. A bond with a 5% coupon purchased at $900 has a current yield of 5.56%. (Current yield equals $50 annual interest divided by $900 market price.) So an investor who pays $900 for a bond with a 5% coupon is earning a 5.56% current yield. Current yield does not factor in the price appreciation on a discount bond or the price depreciation on a premium bond that is held to maturity. For a par bond, nominal yield, current yield, and yield to maturity are equal. For a discount bond, nominal yield is less than current yield, which is less than yield to maturity. A premium bond has a nominal yield greater than its current yield, which is greater than its yield to maturity.
Rate this current yield definition...




Where is the market headed? The answer may surprise you. Find out with the exclusive & Barron's recommended charts of Chart of the Day. 

Popular Terms: exdividend, in escrow, 1031 exchange, inflation, 1035 exchange, whollyowned subsidiary, minority interest, debt service coverage, balance sheet, cancelled check, required rate of return, covered put, option premium, stock market close, deferred tax, Zero Cost Collar, Key Rate Duration, exdividend date, average price per share, VIX, LIBOR, quality assurance, class C shares, FICO score, current ratio, implied volatility, stock split, 401a, reverse mortgage, limit order, command economy, real GDP, 144a, APR, annual return, dividends payable, open position, per diem, phantom income, margin rate, FTSE, labor relations, deferred revenue, EBITDA, risk management, retained earnings, liquidity ratio, diluted share, irrevocable trust


 