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What Is a Bond's Current Yield? How Does the Current

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Essay

What is a bond's current yield? How does the current yield differ from the yield to maturity and what determines how close the two values are?


Definitions:

Interest

Payment received for the use of borrowed money, or the money paid for taking out a loan, often expressed as a percentage.

Utility Functions

Models used to quantify the satisfaction or utility a consumer derives from consuming various bundles of goods and services.

Consumption

The process or activity of using goods and services to satisfy wants or needs.

Cream

The fatty part of milk, gathered at the top, used in cooking or as a spread.

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