What is Current Yield and Yield to Maturity?
In plain english, current yield is the return that you get from your bond when you purchase it. Current yield depends on the price that this security is purchased for (which is your investment, and not the face value). If the market price is lower than the face value, then the current yield will be higher than the coupon rate. Buying the bond at a premium will consequently reduce your current yield. Yield to maturity is the total return that you would get on your investment, assuming that you hold the bond till maturity. This is the main feature that every bond investor considers before making his/her decisions. (Questions will be updated frequently).
