**Current Yield**

The current yield of a bond measures the returns an investor can expect if he holds the bond for a period of one year. It is calculated as the annual interest received divided by the current price of the bond.

**Current Yield = Annual Interest / Current Bond Price**

The current bond price is the clean price of the bond.

One must note that the current yield represents the return from the bond at a particular time and does not represent the returns over the lifetime of the bond. The current yield also does not take into account the reinvestment risk.

**Example:**

Assume that a $100 par bond is currently trading at $95, and pays a coupon of 6%. The current yield will be given as follows:

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