ReturnLab
Bond Yield Calculator
See the income return a bond is paying right now, based on today's price — not its face value.
Current yield on a bond at different market prices
Current yield divides the annual coupon payment by what the bond costs today. The first six rows are the same 5% coupon bond, priced at par, at a discount and at a premium.
| Annual coupon | Bond price | Trading at | Current yield |
|---|---|---|---|
| $50 | $1,000 | par | 5.00% |
| $50 | $950 | discount | 5.26% |
| $50 | $900 | discount | 5.56% |
| $50 | $850 | discount | 5.88% |
| $50 | $1,050 | premium | 4.76% |
| $50 | $1,100 | premium | 4.55% |
| $30 | $1,000 | par | 3.00% |
| $70 | $1,000 | par | 7.00% |
| $70 | $900 | discount | 7.78% |
The coupon is fixed in dollars for the life of the bond, so the yield an investor actually gets depends entirely on the price paid. When market rates rise, existing bonds fall in price until their yield is competitive - that is the mechanism behind bond prices moving opposite to interest rates. Current yield ignores two things: any capital gain or loss if you hold to maturity, and the time remaining. Yield to maturity accounts for both and is the better figure for a bond you intend to hold, especially one bought well away from par.
Current yield vs. yield to maturity
Current yield is a quick snapshot using today's price only. Yield to maturity is more complete — it also accounts for any gain or loss you'll realize if you hold the bond until it matures.
Why bond prices and yields move opposite
A bond's coupon payment is fixed, so when its market price falls, that same fixed payment represents a larger percentage return — pushing yield up, and vice versa.
How interest rate changes affect existing bonds
When the Federal Reserve raises rates, new bonds offer higher coupons, making existing lower-coupon bonds less attractive — their market price drops until their effective yield matches the new rate. A 10-year bond with a 3% coupon loses roughly 8% of its value when market rates rise by 1%. Longer-duration bonds are more sensitive to rate changes.
Frequently asked questions
How do you calculate bond yield?
Current Yield = Annual Coupon Payment ÷ Market Price × 100. A bond with a $50 annual coupon trading at $950 has a current yield of 5.26% (50 ÷ 950 × 100). If the same bond trades at $1,050 (premium), yield drops to 4.76%.
What is the difference between coupon rate and yield?
Coupon rate is fixed when the bond is issued — it's the annual payment as a percentage of face value ($1,000). Yield changes daily based on the bond's market price. If you buy at face value, yield equals coupon rate. Buy below face value (discount) and yield is higher; above face value (premium) and yield is lower.
Why do bond prices go down when interest rates go up?
A bond's coupon is fixed. If new bonds offer 5% and yours pays 3%, nobody will buy yours at full price. Its market price drops until its effective yield matches ~5%. The closer the bond is to maturity, the less its price changes — short-term bonds are less sensitive to rate hikes.
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Last updated: September 6, 2026