A Florida state savings bond can be converted to $1,000 at maturity 7 years from now. If the state bonds are to be competitive with U.S. savings bonds, which pay 2 % interest compounded annually, at what price will the state's bonds sell? At what price would the bond sell if U.S. savings bonds were paying 4 % interest compounded annually? Compare your answers.

If U.S. savings bonds were paying 2 % interest compounded annually, the current price, PV, of the state bonds is $. (Round to the nearest cent.)

If U.S. savings bonds were paying 4 % interest compounded annually, the current price, PV, of the state bonds is $. (Round to the nearest cent.)

Which of the following statements is correct? (Select the best answer below.)

A. The bond price and the interest rate are positively related.

B. The bond price and the interest rate are negatively related.

C. There is not enough information to answer the problem.

D. The bond price and the interest rate are not related.