Bond Yields
Current yield is calculated as:
Current Yield = Annual Interest / Market Price. At discount: CY > coupon rate.
Complete Analysis & Legal Rationale
Current yield = Annual Interest / Current Market Price. It measures the income return on a bond based on what you actually pay, not the par value.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
This would just give you the coupon rate, not current yield.
Matches the verified teaching point in the explanation.
This is not a standard yield calculation.
YTM and coupon rate are separate concepts; subtracting them is meaningless.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.