Bond A and bond B both pay annual coupons, mature in 8 years, have a face value of $1000, pay their next coupon in 12 months, and have the same yield-to-maturity. Bond A has a coupon rate of 6.5 percent and is priced at $1,050.27. Bond B has a coupon rate of 7.4 percent. What is the price of bond B?
a. $1,106.83 (plus or minus $4)
b. $995.63 (plus or minus $4)
c. $1,050.27 (plus or minus $4)
d. $1,000.00 (plus or minus $4)
e. None of the above is within $4 of the correct answer
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