Learning Module 1: Fixed-Income Instrument Features
Fixed Income
Current Yield
Current yield \(=\frac{\text { Annual coupon }}{\text { Bond price }}\)
Bond price \(=\frac{\text { Coupon }}{(1+r)^{1}}+\) \(\frac{\text { Coupon }}{(1+r)^{2}}+\cdots+\) \(\frac{\text { Coupon }+ \text { Face value }}{(1+r)^{n}}\)
where:
- \(r=\) Yield to maturity per period
- \(n=\) Number of payments
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### Current Yield
Current yield $=\frac{\text { Annual coupon }}{\text { Bond price }}$
Bond price $=\frac{\text { Coupon }}{(1+r)^{1}}+$
$\frac{\text { Coupon }}{(1+r)^{2}}+\cdots+$
$\frac{\text { Coupon }+ \text { Face value }}{(1+r)^{n}}$
where:
- $r=$ Yield to maturity per period
- $n=$ Number of payments