Current Yield
Chapters in this video
- 0:00 Ivy's panic: why price drops raise yield
- 1:31 The three-step current yield formula
- 2:27 Bond example with real numbers at a discount
- 4:02 Stock dividend yield: same formula, same logic
- 4:50 Current yield vs. total return exam trap
- 5:39 The price-yield seesaw
- 6:08 Premium, par, and discount yield rankings
- 7:41 Why YTM includes the maturity bonus
- 7:43 Rapid-fire exam recap
What this video covers
- What current yield actually measures, and why it applies identically to bonds and dividend-paying stocks
- How to calculate current yield: fixed annual income divided by current market price, with a worked bond example at discount
- The dividend yield formula for stocks, and why it is structurally the same calculation as bond current yield
- Why current yield is only income return: it ignores capital gains, capital losses, and the time value of money
- The inverse price-yield relationship, visualized as a seesaw, and how to use it to answer questions without math
- The ranked yield relationships at par, premium, and discount: when coupon rate equals, exceeds, or falls below current yield and yield to maturity (YTM)
- Why YTM exceeds current yield on a discount bond and falls below it on a premium bond: the maturity bonus or penalty at face value repayment
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 65 course also includes adaptive practice questions and spaced-repetition flashcards, free through December 31, 2026.