A $1,000, two-year bond is issued on January 1, 2014 with a bond interest rate of 8%.

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Question:

A $1,000, two-year bond is issued on January 1, 2014 with a bond interest rate of 8%. The market demands a yield rate of 10% for investments of similar risk. Interest will be paid on June 30th and December 31st each year. On January 1, 2014, the selling price of the bond will be

A. $1,000

B. $965.29

C. $964.54

D. None of the above.