Glossary

The current yield is a financial metric that shows the annual income generated by an investment, such as a bond or dividend-paying stock, relative to its current market price. 📊

It's calculated by dividing the annual income by the investment's current market price and is expressed as a percentage.

For example, if a bond has a face value of $1,000, an annual interest payment (coupon) of $50, and is currently trading at $950, its current yield would be 5.26% ($50 / $950).

Fun fact: The current yield is a snapshot of an investment's income-generating potential at a specific point in time. 📸 It can change frequently as market prices fluctuate, and it's important to consider other factors like credit quality, maturity, and interest rate risk when evaluating fixed-income investments like bonds.