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?

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?
.