Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9. 5%.
The bond has a face value of $1,000,and it makes semiannual interest payments. If you require an 9. 8 % nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
1. $973. 91
2. $1,032. 34
3. $944. 69
4. $808. 34
5. $1,003. 12