Bond Current Yield Calculator
Written by Thierno Sadou Diallo, formula verified per our methodology • Last checked on 9/10/2026
A bond's current yield is calculated with annual coupon ÷ current purchase price × 100. For an €80 coupon and a €950 purchase price, the current yield is about 8.42%.
Explanation
Current yield is the simplest measure of a bond's return: it relates the annual coupon paid to the price actually paid today to acquire the bond, without accounting for what happens at maturity. This exact simplification is what sets it apart from a full yield-to-maturity (YTM) calculation: YTM additionally factors in the capital gain or loss represented by the gap between today's price and the face value repaid at maturity — the same kind of forward-looking capital growth our future value calculator models for a lump sum — spread over the remaining years, making it a more complete but also more complex measure to calculate. A bond bought below its face value ("below par") therefore shows a current yield lower than its YTM, since the latter also captures the capital gain from being repaid at face value at maturity; conversely, a bond bought above par shows a current yield higher than its YTM. Current yield nonetheless remains a quick, widely used metric for comparing the immediate periodic income of several bonds against each other, particularly for an investor who doesn't necessarily plan to hold the bond until maturity.
Example: an €80 coupon, €950 purchase price
Inputs
Annual coupon: €80. Current purchase price: €950.
Calculation
Current yield = (80 ÷ 950) × 100 ≈ 8.4211%.
Result
This bond shows a current yield of about 8.42%.
Frequently asked questions
Why does current yield differ from yield to maturity (YTM)?
Because current yield deliberately ignores the capital gain or loss represented by the difference between today's price and the face value repaid at maturity, while YTM explicitly factors it in. A bond bought below par therefore has a YTM higher than its current yield (repayment at face value generates an extra capital gain), and vice versa for a bond bought above par.
Is current yield enough to decide whether to buy a bond?
Current yield gives a quick picture of immediate periodic income, but remains incomplete for a hold-to-maturity investment decision, since it ignores the final capital gain or loss. For a fuller picture accounting for price, face value, and time remaining, a proper yield-to-maturity calculation, discounting future cash flows the way our present value calculator does, remains the reference.
Does current yield change if I hold the bond longer?
No, current yield is only recalculated from the purchase price paid at the time of acquisition and the fixed annual coupon: it therefore stays constant for the investor who bought the bond, regardless of how much time has passed. Only a new purchase at a different market price would change this current yield, for that new buyer.