Current Yield
A bond's annual coupon payment divided by its current market price, expressing the income return as a percentage.
What is Current Yield?
Current yield is a simple measure of a bond's income return, calculated by dividing the annual coupon payment by the bond's current market price. Unlike yield to maturity, current yield ignores the impact of the bond's purchase price relative to its face value and does not account for reinvestment of coupons or any capital gain/loss if the bond is held to maturity. For a bond trading at a discount, current yield is less than YTM; for a premium bond, current yield exceeds YTM. Current yield is useful for comparing the near-term income of bonds with similar maturities but is generally considered a less complete measure than YTM for total return analysis.
Example
A bond with a $1,000 face value pays a $50 annual coupon (5% coupon rate) and currently trades at $950. Current yield = $50 / $950 = 5.26%. The bond's YTM (which also accounts for the $50 price discount to face value over the remaining life) would be slightly higher than 5.26%.
Source: Investopedia — Current Yield