Consider a bond that pays $1000 in one year. Suppose that the market interest rate for savings is 8%, but the interest rate for borrowing is 10%. The price range that this bond must trade in a normal market if no arbitrage opportunities exist is closest to:

A. $909 to $917

B. $909 to $926

C. $917 to $926

D. $909 to $1000

Answer rating: 100% (QA)

The Correct answer is B 909 to 926 Explanation Consider a bond that pays 1000 ... View the full answer