2.1.1.1. Current Yield
Current yield (CY) is a snapshot approximation that represents the return an investor might expect to receive who purchases a bond in the secondary market today and sells it one year later at the same price. It should be similar to the yield of the same bond if it were newly issued today. It is calculated by this formula:
For example, a 6% bond purchased at discount for $960 has a current yield of $6.25%. The annual coupon payment is 6% times par value, or $60; the annual coupon divided by the purchase price of $960 is $6.2