current yield

current yield
The ratio of the coupon to the current market price of the debt instrument. Chicago Board of Trade glossary
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(1) For bonds, a measure of the simple interest annual yield for investments with coupon rates and with maturities of one year or more. To calculate the current yield, the annual coupon interest income is simply divided by the amount paid to acquire the investment. It is important to note that the current yield is only accurate for investments purchased at par. The current yield calculation includes just one income cash flow - the annual coupon interest income. It ignores the profit or loss resulting from discounts and premiums.
(2) For stocks, the annual dividend income divided by the price per share. American Banker Glossary
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For bonds or notes, the coupon rate divided by the market price of the bond. Bloomberg Financial Dictionary
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A term used frequently in bond transactions. Current yield is computed by dividing the annual amount of interest by the price paid for the bond or security. If the security is purchased at a discount from the par or principal value, the current yield with be higher than the stated interest or coupon rate. Chicago Mercantile Exchange Glossary

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current yield current yield ➔ yield1

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   A measure of the return to a bondholder, calculated as a ratio of the coupon to the market price. It is simply the annual coupon rate divided by the clean price of the bond.
   ► See also Clean Price, YTM.

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current yield UK US noun [C]
► FINANCE, STOCK MARKET the rate of income from an investment for a year, calculated by dividing the total income by the current price of the total investment: »

The stock's current yield is 2.3%.


Financial and business terms. 2012.

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