Describes the yield on a bond based on the coupon rate and the current market price of the bond (not on its face or par value).
​
Current yield is calculated by dividing the annual interest earned on a bond by its current market price. Where the coupon is partly dependent on Libor, future coupons are forecast by holding Libor unchanged from the most recent coupon rate.
​
For example, a £1,000 bond selling for £850 and paying an 8% coupon rate (or £80 per year) has a current yield of 9.41% (the quotient of £80 divided by £850). The coupon rate in this example is 8% (80/1,000).