A $1,000 Face Value 7% Convertible Bond Pays Interest Semi-Annually

A $1,000 face value 7% convertible bond pays interest semi-annually and has a maturity date of five years. The conversion price is $40. The market yield on nonconvertible debentures of comparable
Quality is 8%. The market price of the common stock is $38.50 currently. What is the minimum price
At which the convertible bond should sell?

A) $948.26
B) $959.44
C) $962.50
D) $1,000.00
E) $1,037.50