Bond Education | Glossary
Current Yield
The ratio of the coupon rate on a bond to the dollar purchase price expressed as a percentage. Thus if you pay par or 100 cents on the dollar for your bond and the coupon rate is 6%, the current yield is 6%, however, if you paid 97 for your 6% discount bond the current yield is 6.186%. ( .06 divided by 97). If you paid 102 for a 6% bond the current yield is 5.88% (.06 divided by 102).