Laura buys two bonds at time 0. Bond X is a 1,000 par value fourteen-year bond with 10% annual coupons. It is bought at a price to yield an annual effective rate of 8%. Bond Y is a fourteen-year par value bond with 6.75% annual coupons and a face amount of FF. Laura pays P for the bond to yield an annual effective rate of 8%.

During year 6, the write-down in premium (principal adjustment) on bond X is equal to the write-up in discount (principal adjustment) on bond Y.

Calculate P

Possible Answers

A

1,415

B

1,425

C

1,435

D

1,445

E

1,455