The price of the bond is $987.25. The price of a bond is the present value of the future cash flows. In this case, the cash flows are the coupon payments and the face value at maturity.
The coupon payments are semi-annual, so the coupon rate is 7.8% / 2 = 3.9%. The face value is $1,000. The interest rate is 12.1% / 2 = 6.05%.
The present value of the coupon payments is calculated using the following formula:
```
PV = C * 1/(1 + r)^t
```
where:
* C is the coupon payment
* r is the interest rate
* t is the number of periods
In this case, the present value of the coupon payments is:
```
PV = 3.9% * 1/(1 + 0.0605)^6 * 2 * 12 = 253.17
``
The present value of the face value is calculated using the following formula:
```
PV = F / (1 + r)^n
```
where:
* F is the face value
* r is the interest rate
* n is the number of years
In this case, the present value of the face value is:
```
PV = 1000 / (1 + 0.0605)^12 = 634.08
```
The total present value is the sum of the present value of the coupon payments and the present value of the face value. In this case, the total present value is:
```
PV = 253.17 + 634.08 = 887.25
```
The price of the bond is the total present value divided by the number of bonds. In this case, the price of the bond is:
```
Price = 887.25 / 2 = 987.25
```
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