In this video, I explain what is meant by a bond's current yield and how it is related to its yield to maturity (YTM). In the process I also explain why, as long a bond's YTM remains constant, the price of a premium bond will consistently fall and why the price of a discount bond will consistently rise as they both approach maturity.

Students will particularly find this video useful in understanding parts of Chapter 8 (Interest Rates and Bond Valuation) of Corporate Finance (13th Edition) by Ross, Westerfield, Jaffe and Jordan.