Question: 16. Consider a $1,000 par value bond with a 9% annual coupon. The bond pays interest annually. There are 20 years remainming until maturity. You

16. Consider a $1,000 par value bond with a 9% annual

16. Consider a $1,000 par value bond with a 9% annual coupon. The bond pays interest annually. There are 20 years remainming until maturity. You have expectations that in 5 years, the YTM on a 15-year bond with similar risk will be 7.5%. You plan to purchase the bond now and hold it for 5 years. Your required return on this bond is 12%. How much would you be willing to pay for this bond today? (hint: find the expected bond value in 5 years) A) $1132 B) $1086 C) $1044 D) $967 E) $988

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