A $1,000 face value 7% convertible bond has a maturity date of five years. The conversion price is $40. The market yield on bonds of comparable quality is 8%. The market price of the common stock is $38.50 currently. What is the minimum price at which the convertible bond should sell?

a. $962.50

b. $960.07

c. $1,000.00

d. $959.44

e. $1,022.50