XZYY, Inc. currently has an issue of bonds outstanding that will mature in 40 years. The bonds

Question:

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?

a) 10.54%

b) 2.64%

c) 10.82%

d) 15.96%

e) 33.66%

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...