When reviewing the yield on a particular bond, it is important to keep in mind that a bond typically has three different yields - coupon yield, current yield, and yield to maturity.
Coupon yield is the interest rate stated on the bond, which is determined by the issuing company based on prevailing rates at the time the bonds are issued. This is a fixed rate that doesn't change.
Current yield is the return paid by the coupon interest on the bond's current market value. This yield will be higher than the coupon yield for bonds with a premium. The current yield equals the annual interest payment divided by the market value times 100.
Yield to maturity calculates total return provided by the bond, factoring in interest payments and discounts or premiums. Yield to maturity calculations can be time consuming, but can be approximated as follows: annual interest payment plus the average discount or minus the average premium divided by the average of the face value and current bond price times 100.