A $1,000 bond has a present market price of $900 and a yield-to-maturity of 8%. If the yield-to-maturity rose to 9%, its market price would be $875. If its yield-to-maturity were 7%, its price would likely be

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The price of a bond moves inversely to its yield-to-maturity. When the yield-to-maturity decreases from 8% to 7%, the bond's price increases from its current market price of $900. Since $930 is higher than $900 and follows the pattern of price increase as yield decreases (as seen from the given examples of price decrease when yield increases), it is the likely price at a 7% yield-to-maturity.

A $1,000 Bond Has a Present Market Price of $900