What is the formula for yield income?

The yield income is determined by the relationship between the annual coupon payment of a bond and its current market price. In this context, the formula for yield income is calculated as the annual average coupon payment divided by the current bond price. This measure indicates the income an investor can expect to receive from the bond relative to its current market value, thus providing insight into the bond's attractiveness as an investment.

When assessing yield in this manner, the focus is on how much income (in the form of coupon payments) is generated for each dollar invested (as represented by the current bond price). This ratio serves as a critical evaluation tool for investors who want to assess the income-generating capabilities of a bond based on its current market conditions, rather than its face value or original purchase price.

The other formulas do not accurately represent the concept of yield income. For instance, using the face value in the formula would not reflect current market realities, as the bond may be traded above or below its par value. Similarly, the notion of current yield as described in one of the options does not align with how yield income is conventionally calculated, leading to potential misunderstandings about yield measurements in investment analysis.