Current yield is a bond's annual coupon income divided by its current market price, stated as a percentage. Investor.gov's glossary gives the plain case: a bond priced at $1,000 that pays $80 a year has a current yield of 8%. The measure answers one narrow question, how much cash each dollar of today's price earns this year, and stops there. It never asks when the bond matures or what it will repay, which is why most bond quotes lead with yield to maturity instead. The examples below use Treasury notes; the US Treasuries hub covers the securities themselves.
How do you calculate current yield?
Divide the bond's annual coupon payments by its market price; when prices are quoted per $100 of face value, divide the coupon rate by the price.
A bond paying $50 a year on $1,000 of face value that trades at $960 has a current yield of $50 ÷ $960 = 5.21%. Use the quoted price, which leaves out accrued interest. The coupon in dollars never changes, so the result moves only when the price does: current yield simply restates fixed income against a moving price. FINRA's investor guide adds that it matters mostly to someone who may sell before maturity, and that for a new bond bought at par and held, it equals the coupon rate.
What is the current yield on a note bought at a discount?
It is higher than the coupon rate, because the same fixed coupon is divided by a price below face value.
Worked example: A 10-year Treasury note bought at a discount, October 2026
Treasury reopened its 4.625% note maturing August 15, 2036 (CUSIP 91282CRF0) on October 7, 2026, at a price of 94.864261 and a high yield of 5.300%.
- Cost of $10,000 face value: $10,000 × 0.94864261 = $9,486.43, plus accrued interest
- Annual coupons: $10,000 × 4.625% = $462.50, paid as two $231.25 payments
- Current yield: $462.50 ÷ $9,486.43 = 4.875%
- Yield to maturity: 5.300%
- Order of the three measures: coupon 4.625%, then current yield 4.875%, then yield to maturity 5.300%
Current yield credits the buyer for paying less, but not for the $513.57 by which the $10,000 repaid on August 15, 2036 exceeds the cost. That future gain is what separates 4.875% from 5.300%. Treasury notes explained shows why notes sell at a discount after yields rise.
What is the current yield on a note bought at a premium?
It is lower than the coupon rate, because the coupon is divided by a price above face value.
Worked example: A 10-year Treasury note bought at a premium, October 2025
A year earlier, Treasury reopened its 4.25% note maturing August 15, 2035 (CUSIP 91282CNT4) on October 8, 2025, at 101.057226 and a high yield of 4.117%.
- Cost of $10,000 face value: $10,000 × 1.01057226 = $10,105.72, plus accrued interest
- Annual coupons: $10,000 × 4.25% = $425.00
- Current yield: $425.00 ÷ $10,105.72 = 4.206%
- Yield to maturity: 4.117%
- Order of the three measures: coupon 4.250%, then current yield 4.206%, then yield to maturity 4.117%
Here current yield flatters the purchase. Maturity repays $10,000, not the $10,105.72 paid, so $105.72 of the coupons is really the buyer's own money coming back, about $10.75 for each of the note's remaining 9.8 years.
Why does current yield ignore the gain or loss to par?
Because its formula contains no maturity date: it measures one year of coupon income against today's price and never counts the move back to face value.
Every bond's price drifts toward face value as maturity approaches, a pattern known as the pull to par. Current yield leaves that drift out, so two bonds with the same coupon and the same price show the same current yield whether they mature next year or in 30 years. The table keeps the discount note's 4.625% coupon and 94.864261 price and changes only the time left. It is illustrative, with whole years counted from a coupon date.
| Years to maturity | Current yield | Yield to maturity |
|---|---|---|
| 1 | 4.875% | 10.155% |
| 2 | 4.875% | 7.436% |
| 5 | 4.875% | 5.824% |
| 10 | 4.875% | 5.293% |
| 20 | 4.875% | 5.035% |
| 30 | 4.875% | 4.956% |
With a year left, the 5.14-point discount comes back within 12 months and more than doubles the return; with 30 years left it is spread so thin that the two measures nearly meet. Premiums work in reverse: at 101.057226, a 4.25% bond with one year left yields 3.168% to maturity against a 4.206% current yield. Current yield is a fair shortcut only for long bonds priced close to par.
Following one note through several sales shows the measure tracking price. The coupon stays put while the price, and so the current yield, moves:
| Sale of the 4.625% note due August 2036 | Price per $100 | Current yield | Yield to maturity |
|---|---|---|---|
| August 12, 2026, new issue | 99.540696 | 4.646% | 4.683% |
| September 9, 2026, reopening | 98.361116 | 4.702% | 4.834% |
| October 7, 2026, reopening | 94.864261 | 4.875% | 5.300% |
From August to October the price fell 4.7%, current yield rose 0.23 point and yield to maturity rose 0.62 point. Current yield moved less because it ignores the bigger discount an October buyer collects at maturity. Why bond prices fall when rates rise explains the price side of that move.
How does current yield compare with coupon rate, yield to maturity and dividend yield?
Current yield sits between the coupon rate and yield to maturity, and it is the bond counterpart of a stock's dividend yield: income divided by price.
| Measure | Formula | Moves with price? | Counts the gain or loss to par? | Discount note, October 7, 2026 |
|---|---|---|---|---|
| Coupon rate | Annual coupon ÷ face value | No | No | 4.625% |
| Current yield | Annual coupon ÷ price | Yes | No | 4.875% |
| Yield to maturity | Rate equating price with all payments | Yes | Yes | 5.300% |
| Dividend yield (stocks) | Annual dividends ÷ share price | Yes | No maturity to count | Not applicable |
The coupon rate entry explains how Treasury fixes the coupon at auction, the par value entry covers the face amount that prices are quoted against, and dividend yield applies the same income-over-price idea to shares, which dividend investing basics puts to work.
Where do you see current yield?
You see it in bond listings beside yield to maturity, and in any income comparison that asks how much cash a holding pays now for each dollar it costs.
For someone living on bond income, the figure has a real use: the discount note above pays $462.50 a year on $9,486.43, and current yield expresses that cash flow as a rate. It is less useful as a guide to return, and it does not exist for securities without a coupon. Treasury bills earn all their interest through the discount, so their current yield is zero; the Treasury bill calculator gives a bill's investment yield instead, and T-bill discount rate vs investment rate explains how that compares with a note's yield.
What mistakes do people make with current yield?
The main mistake is treating current yield as a bond's total return, which overstates the return on premium bonds and understates it on discount bonds.
- Reading it as the return. The premium note's 4.206% current yield sat above its 4.117% yield to maturity; the discount note's 4.875% sat below its 5.300%.
- Confusing it with the yield in the news. A headline about the 10-year Treasury's current yield almost always means its yield to maturity today, such as the 4.94% par yield on October 30, 2026, not a coupon divided by a price.
- Using the price with accrued interest. Adding the $76.66 of accrued interest to the discount note's $9,486.43 cost would show 4.836% instead of 4.875%. Use the quoted price.
- Comparing bonds of different maturities. Equal current yields can hide very different yields to maturity, as the table of years shows.
- Forgetting that the price can change before you sell. Current yield says nothing about the price you would get in a sale before maturity; selling Treasuries before maturity covers that risk.