Bond Current Yield Calculator
Current yield is the simplest measure of a bond's income return. It divides the bond's annual coupon payment by its current market price, expressing the result as a percentage. Unlike yield to maturity, current yield does not account for the bond's remaining life or the gain or loss you would receive if you held it to maturity. It is most useful for quickly comparing the income returns of different bonds and understanding how price changes affect income yield. For example, when bond prices fall, current yields rise, and vice versa, which is the fundamental inverse relationship between bond prices and yields.
Current yield formula
Annual coupon = face value * coupon rate
Current yield = annual coupon / current market price
The coupon rate is fixed at issuance. The market price fluctuates with interest rates and credit conditions. As price falls, current yield rises. As price rises, current yield falls.
Understanding bond yield measures
- Current yield reflects only income return, not total return including price appreciation or depreciation.
- For a bond trading at par, current yield equals the coupon rate.
- For a discount bond (price below par), current yield exceeds the coupon rate.
- For a premium bond (price above par), current yield is below the coupon rate.
- YTM is a more complete measure because it captures both income and the price-to-par convergence at maturity.
Frequently asked questions
What does current yield tell you?
Current yield shows the annual income return from a bond as a percentage of its current market price. It tells you how much income you earn relative to what you pay today, ignoring any capital gain or loss at maturity.
How is current yield different from coupon rate?
The coupon rate is fixed at issuance and is calculated as a percentage of face value. Current yield uses the current market price instead. If a bond trades below face value, its current yield is higher than the coupon rate; if above face value, it is lower.
Is current yield the same as yield to maturity?
No. Current yield only measures income return and ignores the capital gain or loss you receive when the bond matures at face value. YTM incorporates both income and capital return over the bond's remaining life.
When is current yield most useful?
Current yield is most useful for comparing the income-generating ability of different bonds trading at various prices, especially for investors who need current income and are less concerned with total return. It is also commonly quoted for perpetual bonds (consols).
Where do I find the annual coupon payment?
The annual coupon equals the coupon rate multiplied by the face value. Both are stated in the bond's prospectus or indenture. US Treasury bond information is available at TreasuryDirect.gov; corporate bond data is available via SEC EDGAR.
Official sources
- U.S. Treasury: TreasuryDirect - Bond Information.
- SEC: Investor Bulletin: What Are Corporate Bonds?.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.