The current yield, interest yield, income yield, flat yield or running yield is a financial term used in reference to bonds and other fixed-interest securities such as gilts. It is the ratio of the annual interest payment and the bond's current clean price:
The current yield only therefore refers to the yield of the bond at the current moment. It does not reflect the total return over the life of the bond. In particular, it takes no account of reinvestment risk (the uncertainty about the rate at which future cashflows can be reinvested) or the fact that bonds usually mature at par value, which can be an important component of a bond's return.
Read more about Current Yield: Relationship Between Yield To Maturity and Coupon Rate, Example Calculation
Famous quotes containing the words current and/or yield:
“But there, where I have garnered up my heart,
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The fountain from the which my current runs
Or else dries up: to be discarded thence,
Or keep it as a cistern for foul toads
To knot and gender in!”
—William Shakespeare (1564–1616)
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—Philip Dormer Stanhope, 4th Earl Chesterfield (1694–1773)