Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 6.4%

(annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:

Rating	AAA	AA	A	BBB	BB
YTM	6.64%	6.84%	6.94%	7.34%	7.84%

Assuming that Luther's bonds receive a AAA rating, the price of the bonds will be closest to:

a. $786

b. $1,179

c. $983

d. $1,376

B. A $5,000 bond with a coupon rate of 6.9% paid semiannually has ten years to maturity and a yield to maturity of 6.9%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?

a. fall by $296.18

b. rise by $414.65

c. fall by $355.41

d. rise by $296.18