A Firm Has an Issue of $1,000 Par Value Bonds

Multiple Choice

A firm has an issue of $1,000 par value bonds with a 12 percent stated interest rate outstanding. The issue pays interest annually and has 10 years remaining to its maturity date. If bonds of similar risk are currently earning 8 percent, the firm's bond will sell for ________ today.

A) $1,000
B) $805.20
C) $851.50
D) $1,268.20