Divide the annual coupon by the market price to get a bond’s current yield.
The coupon is fixed against face value, so when the price falls the same payment represents a higher yield. Current yield ignores any capital gain or loss at maturity, which is why yield to maturity is the fuller measure. Current yield is the right measure for income planning and the wrong one for total return, because it excludes the pull to par.
Current Yield
Current yield = annual coupon ÷ market price
Current yield = annual coupon ÷ market price The coupon is fixed against face value, so when the price falls the same payment represents a higher yield. Current yield ignores any capital gain or loss at maturity, which is why yield to maturity is the fuller measure.
Current yield is the right measure for income planning and the wrong one for total return, because it excludes the pull to par.
This calculator takes 3 inputs: Face value, Annual coupon rate, Current market price. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.