Final answer:
The bond would be selling for approximately $875.91.
Step-by-step explanation:
To calculate the price of the bond, we need to consider the yield or total return required by investors. In this case, investors require a return of 7%. The bond has a 6% coupon rate, and it pays interest semiannually for 15 years.
We can use the present value formula to calculate the price of the bond. The formula is:
Price = (C / 2) * (1 - (1 + r)^(-n)) / r + (F / (1 + r)^n)
Where:
- C = coupon payment
- r = semiannual yield
- n = number of periods
- F = face value
By plugging in the values, we can calculate the price of the bond:
Price = (30 / 2) * (1 - (1 + 0.07/2)^(-30)) / (0.07/2) + (1000 / (1 + 0.07/2)^30)
Using a financial calculator or software, we find that the bond would be selling for approximately $875.91. Therefore, the correct answer is A.$875.91.