It represents the return you would expect if you held a bond for a year. You can calculate current yield using the following formula:. This formula gives accurate results as long as you pay par value for the bond. The modified current yield formula takes into account the discount or premium at which you buy the bond, and is calculated as:. The adjusted current yield of 6.
Complete relationship between bond price and yield to maturity nude photo galleries
When you buy a bond, either directly or through a mutual fund, you're lending money to the bond's issuer, who promises to pay you back the principal or par value when the loan is due on the bond's maturity date. In the meantime, the issuer also promises to pay you periodic interest payments to compensate you for the use of your money. The rate at which the issuer pays you—the bond's stated interest rate or coupon rate—is generally fixed at issuance.
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Relationship between bond price and yield to maturity.