Question

8) A five-year coupon bond with a face value of \$1000 is sold in the primary market. The interest rate is 8%. Immediately after receiving the second coupon payment the bondholder sells the bond into the secondary market. At the time of resale the interest rate has dropped to 6%. What is the resale price of the bond?
a) 948.46
b) 986.29
c) 1025.31
d) 1053.46

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