Assume that you are considering the purchase of a 10-year, noncallable bond with an annual coupon rate of 7%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 7% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

a.

$992.35

b.

$1000.00

c.

$1253.12

d.

$1050.40

e.

$870.89