The actual return a bondholder will receive on the bond, based on its current market price. It is given by:

Current yield = annual interest payment/ amount paid for the bond

The current yield for a bond purchased at par value would be equal to the nominal yield. If a bond is selling for less than its par value (below par), the current yield would be higher than the nominal yield, and vice versa (if a bond is selling for more than its par value (above par), the current yield would be lower than the nominal yield. For example, the current yields for a $1,000 bond selling currently at $100 discount and $100 premium relative to its par value would be:

Current yield for the bond selling at discount = 50/900= 5.56%

Current yield for the bond selling at premium= 50/1,100= 4.55%