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What is a current yield and does it matter if you're holding a bond until maturity?

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Current yield is the coupon (dividend payment) divided by the current price. (If there are two payments per year, double this number.)

Yield to maturity takes into account the final face value you get and the price you pay today, it's your actual return over the time you hold it till it matures.

If you ignore the daily price movement and hold to maturity, YTM is all that matters.

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The current yield is a crude measure of the 1-year return of the bond. If you bought the bond at the current price, kept it for a year, then sold it for the purchase price, you'd realize a present-value gain of approximately that percentage of face value. However, current yield assumes that the price of the bond will stay constant over a year. This is almost never true with a coupon bond, because in order to remain constant, the market's expected yield must drop, compensating for the loss of present value of the coupon payments made in that year (which will more than offset the gain in present value of the maturity payout).

Yield to maturity is based on the present value of all of the payouts, time-valued to when they will occur. As those payouts, and their time schedule, are known, the YTM formula is usually solved either for the yield on the current market price, or the price at which you would realize your expected yield. The market ticker calculates it the first way; we know that people are willing to pay and thus can calculate the yield you'd make if you bought now. You as an investor usually calculate it the other way; you want/need your money to grow by X% annually, and so you'd be willing to pay $Y (or less) for a bond at a particular time to get that rate.

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