A 6-Year Bond Which Pays 8 Percent Interest Semiannually Sells

A 6-year bond which pays 8 percent interest semiannually sells at par ($1,000) . Another 6-year bond of equal risk pays 8 percent interest annually. Both bonds are non-callable and have a face value of $1,000. What is the price of the bond which pays annual interest?

A) $689.08
B) $712.05
C) $980.43
D) $986.72
E) $992.64

Correct Answer:

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