Bond Current Yield Calculator — Coupon Income vs Market Price
Enter the face value, annual coupon rate and current market price of a bond to instantly see the current yield, the annual coupon payment in dollars, and whether the bond trades at a premium or discount to par.
%
Annual coupon income as a percentage of current market price
5.26 %
Current YieldAnnual coupon income
5.3%
Market price (remainder)
94.7%
- 1
Annual coupon payment
1,000 × 5 ÷ 100 = 50 - 2
Current yield
50 ÷ 950 × 100 = 5.263Annual coupon as a percentage of the current market price.
How does this calculator work?
Current yield = Annual Coupon / Market Price × 100. The coupon is fixed (Face × Coupon Rate), so yield and price move inversely: as the price falls, the yield rises. It is a simple income metric that excludes capital gains or losses at maturity — for a full return estimate, also calculate yield to maturity.
Formula
How this is calculated
A coupon bond pays a fixed annual interest amount (the coupon) calculated on its face (par) value: Annual Coupon = Face × Coupon Rate. The current yield expresses this income as a percentage of what you actually pay for the bond today — its market price: Current Yield = Annual Coupon / Market Price × 100. Because market price changes daily while the coupon is fixed, the current yield rises when the price falls and falls when the price rises.
When a bond trades above par (premium), the current yield is lower than the nominal coupon rate — you pay more for the same coupon. When it trades below par (discount), the current yield is higher than the coupon rate — you pay less for the same income. The donut chart illustrates this: the blue slice representing the annual coupon as a fraction of the total market price equals the current yield. A smaller market price makes the coupon slice a larger fraction (higher yield).
Current yield is a simple and quickly calculated metric but it has limitations: it ignores capital gains or losses when the bond is redeemed at par, and it does not account for the time value of money. For a complete picture of bond return, use yield to maturity (YTM), which incorporates cash flows over the bond's full life, including the pull-to-par at redemption.
Frequently asked questions
Current yield is the annual coupon divided by the current price — a snapshot income measure that ignores the bond's end value. Yield to maturity (YTM) is the internal rate of return of all future cash flows (coupons plus face value at maturity) assuming the bond is held to maturity. For a bond at a discount (price < par), YTM > current yield because you also gain the pull-to-par capital appreciation. For a premium bond, YTM < current yield because you lose the premium at redemption.
A bond trades below par when market interest rates have risen above the bond's coupon rate. Investors can buy new bonds at the higher current rate, so they discount your older, lower-coupon bond to give it a yield competitive with the market. As the bond approaches maturity the price converges back to par (the pull-to-par effect), delivering a capital gain that compensates for the below-market coupon.
No — the coupon rate is fixed at issuance and based on face value; the current yield is based on the current market price and changes every time the price changes. They are equal only when the bond trades exactly at par. Current yield is always higher than the coupon rate for discount bonds and lower for premium bonds.
TG we-Calculate Editorial Team. (2026). Bond Current Yield Calculator — Coupon Income vs Market Price [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/bond-current-yield-calculator
TG we-Calculate Editorial Team. "Bond Current Yield Calculator — Coupon Income vs Market Price." TG we-Calculate. 2026. https://we-calculate.com/calculator/bond-current-yield-calculator.
TG we-Calculate Editorial Team, "Bond Current Yield Calculator — Coupon Income vs Market Price," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/bond-current-yield-calculator
@misc{wecalculate_bond_current_yield_calculator, title = {Bond Current Yield Calculator — Coupon Income vs Market Price}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/bond-current-yield-calculator}}, year = {2026}, note = {TG we-Calculate} }
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