A $2,500 bond had a coupon rate of 6.50% with interest paid semi-annually. Cody purchased this bond when there were 7 years left to maturity and when the market interest rate was 7.50% compounded semi-annually. He held the bond for 2 years, then sold it when the market interest rate was 3.50% compounded semi-annually.

Calculate his gain or loss on this investment.

a. $475.55

b. -$133.12

c. $38.78

d. $608.66