What Does Current Yield Mean?
Yield refers to the actual rate of return to the issuer of security over a specified time period. Current yield refers to the annual income divided by the current price of the security. It is the financial term used in reference to bonds as well as other fixed interest securities. The current yield tends to look at the current value of a bond instead of its face value.
Insuranceopedia Explains Current Yield
The current yield is the ratio of the annual interest payment. It’s used to approximate the return to be expected. However, it’s not an accurate reflection due to the changing factors that affect the market.
Current yield can be calculated by taking the annual cash inflow and divide it by the market price.