Final answer:
The bondholder would receive $20 per year in interest for nine years, totaling $180. Assuming full repayment of the $1,000 face value upon the company's dissolution, the total return would be $1,180. The provided answer choices do not match this calculation.
Step-by-step explanation:
To calculate the total return for holding the corporate bond for nine years, one must consider both the interest payments received and the principal amount. The bond pays 2% interest annually on a $1,000 face value, which is $20 per year. Over nine years, the total interest would be 9 * $20 = $180. Since the company goes out of business after nine years, the principal amount is likely to be lost unless there is a recovery during bankruptcy proceedings, but this recovery is not addressed in the original problem.
However, assuming full repayment of the face value, which might not reflect real-world outcomes, the total amount the investor would receive over nine years is the sum of the interest payments and the principal amount paid back (which is the face value of the bond). Therefore, the total return is $180 in interest plus the $1,000 principal, which equals $1,180.
The bondholder would receive a total of $1,180 if the principal were repaid upon the company's dissolution. The options provided do not accurately represent this outcome, indicating a possible typo or error in the question.