Kurt Owns a Convertible Bond That Matures in Three Years

Kurt owns a convertible bond that matures in three years. The bond has a 7.5 percent coupon and pays interest semi-annually. The face value of the bond is $1,000 and the conversion price is $25. Similar bonds have a market return of 9.25 percent. The current price of the stock is $26.50 per share. What is the straight bond value?

A) $948.20
B) $955.05
C) $972.80
D) $987.78
E) $991.15