Answer:
The answer is C.
Explanation:
This is a semiannual paying coupon.
N(Number of periods) = 20 periods ( 10years x 2)
I/Y(Yield to maturity) = 3 percent( 6 percent ÷ 2)
PV(present value or market price) = ?
PMT( coupon payment) = $35 ( [7 percent÷ 2] x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 20; I/Y = 3; PMT = 35; FV= $1,000; CPT PV= 1,074.39.
The nearest answer according to the options is $1,074.70
Therefore, the market price of the bond is $1,074.70
