Current Yield vs. Yield to Maturity at low prices
 

When comparing Current Yield to YTM (as calculated from the Excel Yield
() function), there are instances when Current Yield YTM for
discounted bonds. I can't seem to make sense of this. For example,
the Current Yield for a $100 par-valued bond, with a 10% rate, and
price of 1 is 10. But using the function Yield(11/1/09, 11/1/11, 10%,
1, 100, 4) gives a YTM of 9.35 I notice this is only happening with
extremely low-priced bonds.

I don't think there would ever be an instance when YTM < Current
Yield, except for bonds purchased at a premium, so could this is a
problem with the Yield() function not being accurate at very low
prices?

Current Yield vs. Yield to Maturity at low prices
 

YIELD returns 10.04.

"beariebird" wrote:

When comparing Current Yield to YTM (as calculated from the Excel Yield
() function), there are instances when Current Yield YTM for
discounted bonds. I can't seem to make sense of this. For example,
the Current Yield for a $100 par-valued bond, with a 10% rate, and
price of 1 is 10. But using the function Yield(11/1/09, 11/1/11, 10%,
1, 100, 4) gives a YTM of 9.35 I notice this is only happening with
extremely low-priced bonds.

I don't think there would ever be an instance when YTM < Current
Yield, except for bonds purchased at a premium, so could this is a
problem with the Yield() function not being accurate at very low
prices?
.