2. A straight 5 percent annual-pay bond has two years remaining to maturity. A putable bond that is the same in every respect as the straight bond, except the put provision, is priced at $1017.6. With the term structure flat at 6 percent (EAY), what is the value of the embedded put option to the bondholder? Assume a par value of $1000.

a) -$35.93

b) -$17.60

c) $17.60

d) $35.93