An investor purchases a twenty-year, 7% annual coupon bond that has yield to maturity of 7.8% and face value of $1,000. After the bond is purchased and before the first coupon is received, interest rates increase to 8.6%. The investor sells the bond after eighteen years. Assume that interest rates remain unchanged at 8.6% over the eighteen-year holding period.

Assuming that all coupons are reinvested over the holding period at 8.6%, the investors eighteen-year horizon annual rate of return is closest to:

Group of answer choices

8.12%

7.82%

9.79%

8.53%

9.04%