Current Yield Calculator
Divide a bond's annual coupon payment by what it costs today and you have its current yield — the income it pays relative to your actual purchase price, not its face value.
Current Yield Calculator
Enter the bond's annual coupon payment and what it costs today. Add the face value and maturity to see how the current yield compares with yield to maturity.
Total interest paid per year, per bond — add both semi-annual coupons together.
What you pay today. A bond quoted at 95 costs $950 per $1,000 of face value.
Amount repaid at maturity — usually $1,000. Implies a 5.00% coupon rate.
Used only for the yield-to-maturity comparison.
Current Yield
5.26%
$50.00 ÷ $950.00
Yield to Maturity
5.66%
held to maturity in 10 years
Current yield says you earn 5.26% on the $950.00 you put in this year. Because you bought at a discount to the $1,000.00 par value, the 5.66% YTM is higher still — it adds the climb back to par that you collect at maturity.
Current yield ignores maturity entirely. The YTM figure assumes semi-annual coupons, that you hold to maturity, and that coupons are reinvested at the YTM — the standard convention, not a guarantee.
The Current Yield Formula
Current yield = Annual coupon payment ÷ Current market price
The coupon is fixed the day the bond is issued: a $1,000 bond with a 5% coupon pays $50 a year for its whole life, usually as two $25 payments. The price is not fixed — it moves with interest rates, credit quality, and time. Current yield takes the fixed number on top and the moving number underneath, which is why it is a statement about your purchase, not about the bond in the abstract.
That also explains the inverse relationship everyone quotes. Pay $950 for that bond and $50 of income is a 5.26% yield. Pay $1,050 and the same $50 is only 4.76%. The bond didn't change; the price you paid did. Nothing in the formula references maturity, so the current yield of a bond due next year and one due in thirty is calculated identically.
Worked Example: A Treasury Note at a Discount
Take a 10-year Treasury note with $1,000 face value and a 4% coupon, so it pays $40 a year. Rates have risen since it was issued, and it now trades at $960.
- Current yield — $40 ÷ $960 = 4.17%
- Coupon rate — $40 ÷ $1,000 = 4.00%
- Yield to maturity — 4.50% (semi-annual coupons, held all 10 years)
All three numbers describe the same note. The current yield beats the coupon rate because you bought below par. The YTM beats the current yield because, on top of the coupons, the Treasury repays the full $1,000 at maturity — a $40 gain the current yield never sees. For a bond bought at a discount, current yield understates what you will actually earn.
Worked Example: A Corporate Bond at a Premium
Now a corporate bond: $1,000 face value, a 6% coupon paying $60 a year, 8 years left, trading at $1,050 because the issuer's credit improved and rates fell.
- Current yield — $60 ÷ $1,050 = 5.71%
- Coupon rate — $60 ÷ $1,000 = 6.00%
- Yield to maturity — 5.23% (semi-annual coupons, held all 8 years)
Here the ordering flips. You paid $50 above par, and at maturity the company hands back $1,000, not $1,050 — that $50 is gone. Spread over eight years it drags the true return below the current yield. This is the trap: a premium bond can advertise an attractive current yield while quietly returning less. If the bond is callable, the picture can be worse still, since the issuer may redeem it early and cut short the coupons you were counting on.
Run the full picture — current yield, YTM, and yield to call together — in the bond yield calculator.
Current Yield vs. Yield to Maturity
Both are called “yield,” but they answer different questions. Current yield asks what income this bond pays this year against what you paid. Yield to maturity asks what annualized return you earn if you hold it to the end, counting every coupon plus the difference between your price and the face value repaid.
- Bought at a discount — current yield < YTM. You collect the coupons and the climb back to par.
- Bought at par — current yield = YTM = coupon rate. There is no price gain or loss to account for.
- Bought at a premium — current yield > YTM. The premium is not repaid, so it eats into your return.
Use current yield to compare the income streams of bonds you already hold, or to size up how much cash a portfolio throws off. Use YTM to decide what to buy. And if the income is taxable, compare it against a municipal bond on equal footing with the tax-equivalent yield calculator before concluding the higher headline yield wins.
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Frequently Asked Questions
How do you calculate current yield on a bond?
Divide the bond's annual coupon payment by its current market price: current yield = annual coupon ÷ market price. A bond with a $50 annual coupon trading at $950 has a current yield of $50 ÷ $950 = 5.26%. Use the price you actually pay today, not the $1,000 face value — the coupon is fixed in dollars, so the yield rises when the price falls and falls when the price rises.
What is the difference between current yield and yield to maturity?
Current yield measures only this year's coupon income against today's price. Yield to maturity (YTM) is the total annualized return if you hold the bond until it matures, so it also counts the gain or loss between what you paid and the face value repaid at maturity, and it assumes coupons are reinvested at that same rate. Buy at a discount and YTM exceeds current yield, because you also collect the climb back to par. Pay a premium and YTM falls below current yield, because that premium is not repaid. Only at par do the two match.
Is current yield the same as the coupon rate?
Only when the bond trades at par. The coupon rate is the annual coupon divided by the face value and never changes; the current yield divides the same coupon by the market price, which moves every day. A 5% coupon bond bought at $950 has a 5.26% current yield, and the same bond bought at $1,050 has a 4.76% current yield — one coupon rate, two different yields for two different buyers.
Why does current yield rise when bond prices fall?
The coupon is a fixed dollar amount written into the bond, so the numerator of the fraction never moves. When the price in the denominator falls, the same dollars of interest are spread over a smaller investment, which raises the yield. This is why bond prices and yields move in opposite directions, and why a rise in market interest rates pushes down the price of bonds already issued at lower coupons.
When should I use current yield instead of yield to maturity?
Current yield answers a narrow question well: how much income will this bond throw off relative to what I pay for it? That matters if you are living on the coupons or comparing income across holdings. For deciding whether a bond is a good investment, YTM is the better number, because it accounts for maturity, the price paid, and the principal returned. Treat current yield as an income snapshot, not a measure of total return.
Does current yield account for a bond's call date?
No. Current yield ignores maturity, call dates, and the price returned to you — it is a single-year income ratio. A callable bond bought at a premium can show a healthy current yield and still lose money if the issuer redeems it early at a price below what you paid. For that, calculate yield to call alongside YTM in the bond yield calculator.