An analyst wishes to determine the fair value of a BB$-$rated bond that is not publicly traded. The $$1000$ par

bond has $3$ years to maturity, and annual coupon of $7\%.$

The analyst has found $2$ comparable BB$-$rated bonds to perform a matrix pricing to determine the bond$$s

value.

Comparable Bond A $(5$ years to maturity, YIELD$-$TO$-$MATURITY $8\mathrm{.}7\%)$

Comparable Bond B $(2$ years to maturity, YIELD$-$TO$-$MATURITY $7\mathrm{.}4\%)$

Use the interpolation method to determine a fair value for the bond.

$$ $$942$

$$ $$911$

$$ $$979$