# Current Yield.

Current yield is a ratio that measures the annual interest income of a security in relation to its current market price. To calculate current yield, divide the annual interest payment by the market price of the security. For example, if a security has a market price of \$100 and pays interest of \$5 per year, its current yield would be 5%.

Current yield is a good measure of the potential return of a security, but it doesn't take into account the price appreciation or depreciation of the security. For example, if a security has a current yield of 5% but its price falls by 10%, the investor would actually be losing money on the investment.

Current yield is often confused with yield to maturity, which is a different metric that takes into account the price appreciation or depreciation of the security as well as the interest payments. What is the difference between current yield and YTM? Yield to maturity (YTM) is the percentage rate of return paid on a bond, if held until maturity and if all interest payments are made on time. YTM accounts for the time value of money and reinvestment of coupon payments. It is generally considered a more accurate measure of return than current yield, which only reflect the current income on the bond.

Current yield is simply the coupon rate divided by the current price of the bond. For example, if a bond has a coupon rate of 6% and is currently trading at \$1,000, the current yield would be 6%. What are the different types of yields? There are several types of yields, which are generally classified by how they are calculated. The most common types are:

- Coupon yield: This is the yield you get from the interest payments on a bond. It's calculated by dividing the bond's annual interest payments by its price.

- Current yield: This is a more accurate measure of a bond's yield, since it takes into account the bond's price changes. It's calculated by dividing the bond's annual interest payments by its current price.

- Yield to maturity: This is the most accurate measure of a bond's yield, since it takes into account all of the bond's future interest payments and price changes. It's calculated by dividing the bond's present value of all future interest payments by its price.

##### What are current bond yields?

Bond yields are the returns that investors earn from holding bonds. The yield is the bond's coupon rate divided by its price. For example, if a bond has a coupon rate of 5% and a price of \$1,000, its yield would be 5%.

Bond yields can change daily, depending on a number of factors, including interest rates, inflation, and the creditworthiness of the issuer. For example, if interest rates rise, bond prices will fall, and yields will rise.

Currently, bond yields are at historically low levels. For example, the yield on the 10-year Treasury note was just 1.36% as of June 1, 2016. That's down from a high of 15.84% in September 1981.

Investors seeking higher yields have been turning to junk bonds, which are bonds issued by companies with lower credit ratings. Junk bond yields have risen in recent months, but they're still relatively low by historical standards. For example, the yield on the iShares iBoxx \$ High Yield Corporate Bond ETF was 5.22% as of June 1, 2016.

### How do I calculate current yield in Excel?

To calculate the current yield in Excel, you will need to use the YIELD function. The syntax for this function is as follows:

YIELD(settlement, maturity, rate, pr, redemption, frequency, [basis])

Where:

Settlement is the security's settlement date.
Maturity is the security's maturity date.
Rate is the security's annual coupon rate.
Pr is the security's price.
Redemption is the security's redemption value.
Frequency is the number of coupon payments per year.
Basis is the type of day count basis to use.

For example, if you have a security with a settlement date of 01-Jan-2016, a maturity date of 01-Jan-2018, a coupon rate of 5%, a price of 100, a redemption value of 100, and a frequency of 2 (semi-annual), you would use the following formula:

=YIELD(DATE(2016,1,1),DATE(2018,1,1),5%,100,100,2)

This would return a current yield of 5.04%.

What are the three types of yield? 1. Nominal yield: This is the stated or advertised rate of return on an investment, without taking into account the effects of inflation. For example, if a bond has a 6% coupon rate, its nominal yield is 6%.

2. Real yield: This is the rate of return on an investment after taking into account the effects of inflation. For example, if a bond has a 6% coupon rate and inflation is 3%, its real yield is 3%.

3. Current yield: This is the annual income from an investment divided by the current price of the investment. For example, if a bond has a 6% coupon rate and is selling for \$1,000, its current yield is 6%.