




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


 