Yield to maturity and current yield are equal when the bond is selling for exactly par value.

Question

Quizplus · Accepted Answer

Yield to maturity (YTM) is the rate of return anticipated on a bond if it is held until it matures. Current yield is the annual return on the bond as a percentage of its current market price. Yield to maturity and current yield are equal only when the bond is selling for its face value, or par value. When a bond is selling at a premium, the YTM will be lower than the current yield, while when a bond is selling at a discount, the YTM will be higher than the current yield.

Yield to Maturity and Current Yield Are Equal When the Bond