Current yield
The annual coupon divided by the purchase price: what the bond pays in coupon against the money put into it.
Formula
\text{Current yield} = \frac{\text{Annual coupon}}{\text{Clean price}}The denominator is the price without accrued interest. The difference between purchase price and par does not enter the calculation at all — that is both the weakness of the measure and its appeal.
How to read the number
It answers a question about the present cash flow and says nothing about what happens at redemption.
When the metric lies
For a bond bought well above par the current yield is high while the outcome of the investment is distinctly lower: redemption at par takes the difference back.
Also known as: running yield, income yield