Glossary of Municipal Securities Terms

CURRENT YIELD

The ratio of the annual dollar amount of interest paid on a security to the purchase price or market price of the security, stated as a percentage. For example, a $1,000 bond purchased at par with a 5 percent coupon pays $50 per year, or a current yield of 5 percent. The same bond, if purchased at a discount price of $800, would have a current yield of 6.25 percent. A $1,000 bond purchased at a premium price of $1,200 would have a current yield of 4.1 percent. Compare: YIELD TO CALL; YIELD TO MATURITY.

Search the Glossary

 

Browse Terms by Letter