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BOND MATH: The Theory Behind the Formulas by Donald J. Smith

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Some Other Yield Statistics

Let's go back to the 4%, 4-year bond that is priced at 99.342. The bond's yield-to-maturity statistic, which also is called the redemption yield, is 4.182%. That is not the only yield statistic that can be used to describe the investor's rate of return. Another is known as the current yield, but I've also seen it named the running yield and the income yield. It is the annual coupon payment divided by the price of the bond. Here the current yield is 4.0265%.

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I've always imagined that the current yield is a statistic created by a former equity trader because it is analogous to a stock's dividend yield. However, it is ...

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