A bond with a face value of $1,000 matures in 9 years and has a 7% semiannual coupon. The bond currently sells for $846.

You would pay $846 for each bond if you think that a fair market interest rate (discount rate) for such bonds is ____. (hint: find out what is the nominal yield to maturity first)

Select one:

a. 12.53%

b. 15.60%

c. 11.28%

d. 10.24%

e. 8.67%