Current Yield
A bond's annual coupon expressed as a percentage of its current market price.
Formula
Current Yield = Annual Coupon / Current Market Price x 100
Unit
%
In depth
Current yield answers only what the bond pays relative to its price today, ignoring entirely whether the principal repaid at maturity will be more or less than what was paid. That omission makes it misleading for bonds trading far from par: a bond at ₹1,200 repaying ₹1,000 will lose ₹200 of capital that the current yield does not mention. It is useful as a quick income measure for an investor who cares about cash flow, and unsuitable for comparing total returns. Yield to maturity is the measure that includes the capital movement.
Worked example
An 8% coupon bond at ₹1,200 has a current yield of 80 / 1,200 = 6.67%. Held to maturity it also loses ₹200 of principal, so the true return is materially below 6.67%.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Current Yield” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.