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Consider a $1,000 par value bond with a 9% annual coupon. The bond pays interest annually....

Consider a $1,000 par value bond with a 9% annual coupon. The bond pays interest annually. There are 20 years remaining until maturity. You have expectations that in 5 years the YTM on a 15-year bond with similar risk will be 7.5%. You plan to purchase the bond now and hold it for 5 years. Your required return on this bond is 10%. How much would you be willing to pay for this bond today?

Select one:

a. $1132

b. $1044

c. $ 962

d. $1153

e. $ 988

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