Bond Current Yield Calculator
Enter the face value, how often coupons are paid, the coupon rate or the coupon per period, and the bond price to find the current yield and the annual coupon.
Updated
Bond Current Yield Calculator
Our Bond Current Yield Calculator shows how much income a bond pays each year compared with what it costs to buy today. Enter the face value, choose how often coupons are paid, give the coupon rate or the coupon paid each period, and add the market price. It suits investors comparing bonds, students learning fixed income, and anyone checking the income from a bond they already hold.
Quick answer
Current yield is annual coupon ÷ bond price × 100: a bond that pays 60 a year and costs 950 has a current yield of 60 ÷ 950 × 100 ≈ 6.32%.
- Annual coupon: face value × coupon rate, or coupon per period × payments per year.
- Bond price: what the bond costs in the market today, not its face value.
- Below face value: current yield is higher than the coupon rate.
- Above face value: current yield is lower than the coupon rate.
What Is Bond Current Yield?
Bond current yield is the annual coupon income of a bond as a percentage of its current market price. The coupon rate compares the coupons with the face value. Current yield compares them with what an investor would actually pay to buy the bond today, so it is the more useful figure when a bond trades above or below its face value.
It is quicker to work out than yield to maturity (YTM) because it looks only at coupon income and price. That makes it one of the fastest ways to estimate the income return on a bond.
Bond Current Yield Formula
= Annual coupon ÷ Bond price
× 100
The annual coupon comes from either of these:
= Face value × Coupon rate
= Coupon per period
× Payments per year
Use the coupon rate as a decimal in the first version (6% is 0.06). The calculator accepts it as a percentage. If you fill in both the coupon rate and the coupon per period, the coupon per period is used.
How to Calculate Current Yield
A bond has a face value of 1,000 and a 6% coupon paid once a year. It is trading at 950.
= 1,000 × 0.06
= 60
Current yield
= 60 ÷ 950 × 100
≈ 6.32%
- Find the annual coupon. 6% of 1,000 is 60 a year.
- Take the market price. The bond costs 950 today.
- Divide and multiply by 100. 60 ÷ 950 × 100 ≈ 6.32%.
An investor who buys the bond today earns about 6.32% a year in coupon income on the money paid, more than the 6% coupon rate, because the bond costs less than its face value.
Bond Current Yield Examples
Example 1. John is comparing corporate bonds. One has a face value of 1,100, pays a single coupon of 30 a year and costs 950.
Current yield
= 30 ÷ 950 × 100
≈ 3.16%
Example 2. A bond with a face value of 2,000 and an 8% coupon pays 40 every quarter. It costs 1,900.
Current yield
= 160 ÷ 1,900 × 100
≈ 8.42%
The table shows a bond with a face value of 1,000 and a 60 annual coupon at different prices:
| Bond price | Current yield |
|---|---|
| 900 | 6.67% |
| 950 | 6.32% |
| 1,000 | 6% |
| 1,050 | 5.71% |
| 1,100 | 5.45% |
Why Payment Frequency Matters
Coupons are not always paid once a year. Bonds commonly pay monthly, quarterly, semi-annually or annually, and a few securities pay daily. Current yield uses the total for the year, so the payment for one period has to be multiplied by the number of periods.
| Coupon per period | Annual coupon |
|---|---|
| 5 monthly | 5 × 12 = 60 |
| 15 quarterly | 15 × 4 = 60 |
| 30 semi-annually | 30 × 2 = 60 |
The schedules differ but the annual coupon, and so the current yield, is the same.
Current Yield vs Coupon Rate
| Coupon rate | Current yield |
|---|---|
| Based on face value | Based on the current market price |
| Fixed when the bond is issued | Changes whenever the price moves |
| Sets the coupon payments | Shows the income return for a new buyer |
Take a bond with a face value of 1,000 and a 5% coupon, so it pays 50 a year. If the price falls to 900, the current yield is 50 ÷ 900 × 100 ≈ 5.56%. The coupon rate is still 5%, but the buyer pays less for the same income.
Current Yield vs Yield to Maturity
Current yield counts coupon income only. Yield to maturity also counts the gain or loss from the price moving back to face value by the maturity date, and the timing of every payment.
- Bond bought below face value: coupon rate < current yield < yield to maturity.
- Bond bought at face value: all three are equal.
- Bond bought above face value: coupon rate > current yield > yield to maturity.
What Affects Current Yield
- Bond price. When the market price falls, current yield rises. When the price rises, current yield falls.
- Coupon payments. A higher coupon gives a higher current yield at the same price.
- Interest rates. Changes in market rates move bond prices, which changes current yield indirectly.
- Investor demand. Popular bonds can trade above face value, which lowers current yield. Less popular bonds can trade below it, which raises current yield.
When Current Yield Is Most Useful
- Comparing bonds that trade at different prices
- Estimating the annual income from a bond or a bond portfolio
- Building a retirement income portfolio
- Screening corporate, municipal and government bonds
- Reviewing bonds trading at a discount or a premium
Limits of Current Yield
Current yield measures only the annual coupon income against the current price. It does not consider:
- Capital gains or losses at maturity
- Reinvestment of coupon payments
- The time left until maturity
- Call or conversion features
For a full picture of a bond's return, use current yield together with yield to maturity, yield to call and duration. A zero-coupon bond pays no coupons, so its current yield is 0% even though it earns a return at maturity.
Key Terms
- Face value
- The amount repaid at maturity, also called par value.
- Coupon
- The interest payment a bond makes each period.
- Coupon rate
- Annual coupon as a percentage of face value.
- Bond price
- What the bond costs in the market today.
- Discount
- A price below face value.
- Premium
- A price above face value.
How to Use the Bond Current Yield Calculator
- Enter the face value. Type the face (par) value of the bond, such as 1,000. Commas and a currency sign are fine.
- Choose how often coupons are paid. Pick Annually, Semi-annually, Quarterly, Monthly or Daily.
- Enter the coupon. Type the coupon rate as a percentage, such as 6, or the coupon paid each period, such as 30. If you fill in both, the coupon per period is used.
- Enter the bond price. Type the current market price of the bond, such as 950.
- Read and copy the result. The current yield appears as you type, with the working, the annual coupon, the coupon per period, the coupon rate and whether the bond trades at a discount or a premium. Press Copy to copy it, or Clear or Esc to start again.
Example: face value 2,000, quarterly coupons of 40 and a price of 1,900. The annual coupon is 40 × 4 = 160 and the current yield is 160 ÷ 1,900 × 100 ≈ 8.42%.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate the current yield of a bond?
Divide the annual coupon by the current market price of the bond and multiply by 100. Current yield = annual coupon ÷ bond price × 100. A bond that pays 60 a year and costs 950 has a current yield of about 6.32%.
What is the current yield of a 1,000 bond with a 6% coupon priced at 950?
The annual coupon is 1,000 × 6% = 60, so the current yield is 60 ÷ 950 × 100 ≈ 6.32%.
Why is my current yield different from the coupon rate?
The coupon rate is worked out on the face value of the bond, while current yield is worked out on its current market price. When a bond trades below face value the current yield is higher than the coupon rate, and when it trades above face value the current yield is lower.
Can I calculate current yield for monthly, quarterly or semi-annual coupons?
Yes. Choose Daily, Monthly, Quarterly, Semi-annually or Annually, then enter the coupon rate or the coupon paid each period. The calculator converts it to an annual coupon before working out the current yield.
Should I enter the face value or the market price?
Enter both. The face value is used with the coupon rate to find the annual coupon, and the market price is what the annual coupon is divided by.
What is the difference between current yield and yield to maturity?
Current yield counts only the coupon income against the price. Yield to maturity also counts the gain or loss as the price moves to face value at maturity and the timing of every payment. For a bond bought below face value, yield to maturity is higher than current yield.
Does current yield show the total return on a bond?
No. It measures only annual coupon income against the current price. It leaves out capital gains or losses, reinvested coupons and the time left to maturity. Use yield to maturity as well to judge the total expected return.
Is the Bond Current Yield Calculator free?
Yes. It is completely free, needs no sign-up, and can be used as many times as you like.
Sources
- Wikipedia. Current yield.
- Investor.gov (U.S. SEC). Current yield.
- FINRA. Bonds.
- Wall Street Prep. Current yield: formula and calculator.
- Corporate Finance Institute. Bond pricing.
Try our Bond Current Yield Calculator to see what a bond really pays at its current price.