A bond has a $1,000 par value, 10 years to maturity, and pays a coupon of 7.0% per year, semiannually. You expect the bond's yield to maturity to decrease to 6.5% per year in two years. If you buy the bond today for $987.75 and sell it in two years, what is the annual return on your investment? 1) 9.12% 2) 9.42% 3) 8.96% 4) 8.74% 5) 9.04%