XZYY Inc currently has an issue of bonds outstanding that wi

XZYY, Inc. currently has an issue of bonds outstanding that will mature in 40 years. The bonds have a face value of $1,000 and a stated annual coupon rate of 9% with quarterly coupon payments. The bond is currently selling for $856. The bonds may be called in 4 years for 111% of par value. What is the quoted annual yield-to-maturity for these bonds?

10.54%

2.64%

10.82%

15.96%

33.66%

	10.54%
	2.64%
	10.82%
	15.96%
	33.66%

Solution

Face value (FV) $                                  1,000.00 Coupon rate 9.00% Number of compounding periods per year 4 Interest per period (PMT)                                            22.50 Bond price (PV) $                                   (856.00) Number of years to maturity 40 Number of compounding periods till maturity (N) 160 Bond Yield to maturity RATE(NPER,PMT,PV,FV) Bond Yield to maturity 2.64%