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36 Yes They May, Inc. has a bond issue outstanding with a $1,000 par value and...

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Yes They May, Inc. has a bond issue outstanding with a $1,000 par value and a maturity of 23 years. The bonds have an annual coupon rate of 18.0% with semi-annual coupon payments. The current market price for the bonds is $845. The bonds may be called in 3 years for 118.0% of par. What is the quoted annual yield-to-maturity for the bonds?

10.67%
21.34%
23.87%
30.32%
38.91%
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Answer #1

Calculate the yield to maturity as follows fr :RATE(3*2,-1000*18%/2,845,-1000*118%) Function Arguments RATE 3*2 -1000* 18%/2 Nper 90 845 Pmt Pv 845 Fv -1000*118% Dial = -1180 Type number 0.15161394 Returns the interest rate per period of a loan or an investment. For example, use 6%/4 for quarterly payments at 6% APR. Fv is the future value, or a cash balance you want to attain after the last payment is made. If omitted, uses Fv = 0 Formula result 0.15161394 OK Cancel Therefore, semiannual yield to maturity is 1 516 14% Therefore, annual veild to maturity is 15.1614%*2 30.3200

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